SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
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[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
March & McLennan Companies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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[MMC LOGO]
2002
Notice of Annual Meeting
And Proxy Statement
[MMC LETTERHEAD]
Dear MMC Stockholder:
You are cordially invited to attend our annual meeting of stockholders at 10:00
a.m. on Thursday, May 16, 2002 in the auditorium on the second floor at 1221
Avenue of the Americas, New York, New York.
In addition to the matters described in the attached proxy statement, we will
report on our Company's activities during 2001. You will have an opportunity to
ask questions and to meet your directors and executives.
Whether you plan to come to the annual meeting or not, your representation and
vote are important, and your shares should be voted. Please complete, sign, date
and return the enclosed proxy card promptly. You also may vote by telephone, or
electronically over the Internet, by following the instructions on your proxy
card.
We look forward to seeing you at the meeting. Your vote is important to us.
Very truly yours,
/s/ Jeffrey W. Greenberg
Jeffrey W. Greenberg
Chairman
March 29, 2002
MARSH & MCLENNAN COMPANIES, INC.
1166 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036-2774
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
TIME:
10:00 a.m. Local Time
DATE:
May 16, 2002
PLACE:
Second Floor Auditorium
1221 Avenue of the Americas
New York, New York
PURPOSE:
o Elect six persons to serve as Class II directors
o Ratify the appointment of Deloitte & Touche LLP as independent
auditors
o Conduct other business if properly raised
Only stockholders of record on March 20, 2002 may vote at the meeting. This
proxy solicitation material is being mailed to stockholders on or about March
29, 2002 with a copy of MMC's 2001 Annual Report, which includes financial
statements for the period ended December 31, 2001.
YOUR VOTE IS IMPORTANT. YOU MAY CAST YOUR VOTE BY MAIL, TELEPHONE OR OVER
THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON YOUR PROXY CARD.
/s/ Gregory Van Gundy
GREGORY VAN GUNDY
SECRETARY
MARCH 29, 2002
GENERAL INFORMATION
WHO MAY VOTE
Holders of our common stock, as recorded in our stock register on March 20,
2002, may vote at the meeting. As of that date, there were 271,603,092 shares of
common stock outstanding and entitled to one vote per share. A list of
stockholders will be available for inspection for at least ten days prior to the
meeting at the principal executive offices of MMC at 1166 Avenue of the
Americas, New York, New York.
HOW TO VOTE
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
Most stockholders have a choice of voting by using a toll free number, over
the Internet or by completing a proxy card and mailing it in the postage-paid
envelope provided. Please refer to your proxy card or the information forwarded
by your bank, broker or other holder of record to see which options are
available to you.
HOW PROXIES WORK
The Company's Board of Directors is asking for your proxy. Giving us your
proxy means you authorize us to vote your shares at the meeting, or at any
adjournment thereof, in the manner you direct. You may vote for all, some, or
none of our director candidates. You may also vote for or against the other
proposal or abstain from voting.
If you sign and return the enclosed proxy card but do not specify how to
vote, we will vote your shares in favor of our director candidates and in favor
of item 2.
As of the date hereof, we do not know of any other business that will be
presented at the meeting. If other business shall properly come before the
meeting, including any proposal submitted by a stockholder which was omitted
from this Proxy Statement in accordance with applicable federal securities laws,
the persons named in the proxy will vote according to their best judgment.
SOLICITATION
In addition to this mailing, proxies may be solicited personally,
electronically or by telephone. We pay the costs of soliciting this proxy. We
also reimburse brokers and other nominees for their expenses in sending these
materials to you and getting your voting instructions.
REVOKING A PROXY
You may revoke your proxy before it is voted by submitting a new proxy with
a later date; by voting in person at the meeting; or by notifying the Company's
Secretary in writing.
QUORUM AND CONDUCT OF MEETING
In order to carry on the business of the meeting, we must have a quorum.
This means at least a majority of the outstanding shares eligible to vote must
be represented at the meeting, either by proxy or in person.
The Chairman has broad authority to conduct the annual meeting so that the
business of the meeting is carried out in an orderly and timely manner. In doing
so, the Chairman has broad discretion to establish reasonable rules for
discussion, comments and questions during the meeting. The Chairman also is
entitled to rely upon applicable law regarding disruptions or disorderly conduct
to ensure that the meeting is conducted in a manner that is fair to all
participants.
Only shareholders, their proxy holders, and MMC's guests may attend the
meeting. Verification of ownership may be required at the admissions desk. If
your shares are held in the name of your broker, bank, or other nominee, you
must bring to the meeting an account statement or letter from the nominee
indicating that you are the beneficial owner of the shares on March 20, 2002,
the record date for voting.
VOTES NEEDED
Directors are elected by a plurality of the votes cast. "Plurality" means
that the individuals who receive the largest number of votes cast FOR are
elected as directors up to the maximum number of directors to be chosen at the
meeting. Votes withheld from any director will not be counted in such director's
favor.
All other matters to be acted on at the meeting require the affirmative
vote of a majority of the shares of MMC stock present or represented and
entitled to vote at the meeting to constitute the action of the stockholders. In
accordance with Delaware law, abstentions will be treated as present and
entitled to vote for purposes of the preceding sentence, while broker nonvotes
will not. A broker nonvote is a proxy submitted by a broker in which the broker
fails to vote on behalf of a client on a particular matter for lack of
instruction when such instruction is required by the New York Stock Exchange.
Broker nonvotes will be counted for purposes of determining the presence of a
quorum for the transaction of business.
2
ITEM 1
ELECTION OF DIRECTORS
The Board is divided into three classes. The regular terms of office for
the Class II, Class III and Class I directors expire at the 2002, 2003 and 2004
annual meetings of stockholders, respectively. Six persons are to be elected at
the meeting to hold office as Class II directors for a term of three years and
until their respective successors are elected and qualified. The remaining Class
I and Class III directors will not be elected at the meeting as their respective
terms will continue.
Mr. Morton O. Schapiro is a new nominee standing for election as a Class II
director.
Each director has served as a director since the year indicated. Mr. John
D. Ong, a Class II director, resigned from the Board on February 12, 2002 upon
being named U.S. Ambassador to Norway.
In the unexpected event that any nominee should become unavailable to serve
as a director prior to the meeting for any reason, the persons designated as
proxies reserve full discretion to cast their votes for another person whom the
Board might designate in substitution.
The Board recommends you vote FOR each of the following candidates:
NOMINEES FOR CLASS II DIRECTORS
(TERMS EXPIRING IN 2005)
[PHOTO OF JEFFREY W. GREENBERG)
JEFFREY W. GREENBERG* DIRECTOR SINCE 1996
Mr. Greenberg, age 50, became Chairman of the Board of MMC in 2000, having been
named Chief Executive Officer in 1999. He was President of MMC from 1999 until
becoming Chairman. Mr. Greenberg became Chairman of MMC Capital, Inc., a
subsidiary of MMC, in 1996. He joined MMC in 1995. Mr. Greenberg is a member of
the Board of The Brookings Institution and a trustee of Brown University, the
Spence School in New York City and New York-Presbyterian Hospital, as well as a
member of the Council on Foreign Relations and The Trilateral Commission.
[PHOTO OF STEPHEN R. HARDIS]
STEPHEN R. HARDIS** DIRECTOR SINCE 1998
Mr. Hardis, age 66, is Chairman of Axcelis Technologies, Inc. He retired as
Chairman and Chief Executive Officer of Eaton Corporation in 2000. He joined
Eaton Corporation in 1979. Mr. Hardis is a director of American Greetings
Corporation, Apogent Technologies Inc., Lexmark International Corporation,
Nordson Corporation, Progressive Corporation and Steris Corporation and a
trustee of the Cleveland Clinic and the Cleveland Orchestra.
[PHOTO OF THE RT. HON. LORD LANG OF MONKTON]
THE RT. HON. LORD LANG OF MONKTON, DL* *** DIRECTOR SINCE 1997
Lord Lang, age 61, is a citizen of the United Kingdom and was a member of the
British Parliament from 1979 to 1997, serving in the Cabinet as Secretary of
State for Scotland from 1990 to 1995 and as President of the Board of Trade and
Secretary of State for Trade and Industry from 1995 to 1997. He is chairman of
BFS US Special Opportunities Trust plc, Murray tmt plc and Thistle Mining Inc.,
as well as deputy chairman of European Telecom plc, and a non-executive director
of Second Scottish National Trust plc.
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[PHOTO OF MORTON O. SCHAPIRO]
MORTON O. SCHAPIRO NEW NOMINEE
Mr. Schapiro, age 48, became president of Williams College in Williamstown,
Massachusetts in 2000. From 1994 until 2000 he served as Dean of the College of
Letters, Arts and Sciences at the University of Southern California and from
1999 to 2000 he also served as the University's vice president for planning. Mr.
Schapiro is a director of MAI Systems Corp. and a trustee of The WM Group of
Funds, a management subsidiary of Washington Mutual Bank. He also serves on the
Boards of the Williamstown Theater Festival and the Sterling & Francine Clark
Art Institute.
[PHOTO OF ADELE SIMMONS]
ADELE SIMMONS* ** DIRECTOR SINCE 1978
Mrs. Simmons, age 60, is Vice Chair of Chicago Metropolis 2020 and a senior
associate of the Center for International Studies at the University of Chicago.
She served as President of the John D. and Catherine T. MacArthur Foundation
from 1989 to 1999. She is a director of The Field Museum, Environmental Defense,
Synergos Institute, the Rocky Mountain Institute, the Global Fund for Women, the
Chicago Public Education Fund, the Union of Concerned Scientists and the
American Prospect. She is Chair of the Committee to Visit the Graduate School of
Education at Harvard University and a member of the Advisory Board of the World
Bank Institute.
[PHOTO OF A. J. C. SMITH]
A. J. C. SMITH* DIRECTOR SINCE 1977
Mr. Smith, age 67, retired in 2000 as Chairman of the Board of MMC, a position
he held since 1992. He served as Chief Executive Officer of MMC from 1992 to
1999. Mr. Smith is a trustee of the various mutual funds managed by Putnam
Investment Management, LLC, a subsidiary of MMC. He is also chairman of the
Central Park Conservancy, a member of the Board of Trustees of the Carnegie Hall
Society, Inc., the Educational Broadcasting Corporation in New York City and the
National Museums of Scotland (Edinburgh). Mr. Smith is also a member of the
Board of Overseers of the Joan and Sanford I. Weill Graduate School of Medical
Sciences of Cornell University.
CONTINUING CLASS III DIRECTORS
(TERMS EXPIRING IN 2003)
[PHOTO OF PETER COSTER]
PETER COSTER DIRECTOR SINCE 1988
Mr. Coster, age 62, is President and Chief Executive Officer of Mercer
Consulting Group, Inc., a subsidiary of MMC. He joined Mercer in 1984 upon its
acquisition of a U.K. consulting firm that Mr. Coster had joined in 1962. He is
a trustee of The Foundation Fighting Blindness.
4
[PHOTO OF CHARLES A. DAVIS]
CHARLES A. DAVIS DIRECTOR SINCE 2000
Mr. Davis, age 53, was appointed Vice Chairman of MMC in 1999 and has been
serving as President of MMC Capital, Inc., a subsidiary of MMC, since 1998 and
as its Chief Executive Officer since 1999. Prior to joining MMC, Mr. Davis was a
senior director and limited partner at Goldman Sachs. During his 23-year career
at Goldman Sachs, he had been head of investment banking services worldwide, a
member of the international executive committee and a general partner. Mr. Davis
is a director of Media General, Inc., Progressive Corporation and Merchants
Bancshares, Inc. He is a trustee of the University of Vermont.
[PHOTO OF GWENDOLYN S. KING]
GWENDOLYN S. KING** DIRECTOR SINCE 1998
Ms. King, age 61, is president of Podium Prose in Washington, D.C. She was
senior vice president, corporate and public affairs at Peco Energy from 1992
until 1998. From 1989 to 1992, she served as commissioner of the Social Security
Administration in the U.S. Department of Health and Human Services. In 2001, Ms.
King was appointed by President George W. Bush to the President's Commission to
Strengthen Social Security. Ms. King is a director of Countrywide Credit
Industries, Inc., Lockheed Martin Corporation, Monsanto Company, Pharmacia
Corporation and the National Association of Corporate Directors and a member of
the George Washington University Council on American Politics.
[PHOTO OF LAWRENCE J. LASSER]
LAWRENCE J. LASSER DIRECTOR SINCE 1987
Mr. Lasser, age 59, is President and Chief Executive Officer of Putnam
Investments, LLC, a subsidiary of MMC. He joined Putnam in 1969. Mr. Lasser is a
trustee of the various mutual funds managed by Putnam Investment Management,
LLC. He is a member of the Board of Governors of the Investment Company
Institute, a member of the Board of Trustees of the Museum of Fine Arts
(Boston), a trustee and member of the finance and executive committees of Beth
Israel/Deaconess Medical Center in Boston, a member of the Commercial Club of
Boston, the CareGroup Board of Managers Investment Committee and the Council on
Foreign Relations, and a member of the Board of Directors of the United Way of
Massachusetts Bay.
[PHOTO OF DAVID A. OLSEN]
DAVID A. OLSEN DIRECTOR SINCE 1997
Mr. Olsen, age 64, served as Chairman and Chief Executive Officer of Johnson &
Higgins prior to its business combination with MMC in 1997. Mr. Olsen joined
Johnson & Higgins in 1966. He served as Vice Chairman of MMC from May 1997 until
December 1997. Mr. Olsen is a member of the Board of Trustees of Bowdoin
College, and a member of the boards of U.S. Trust Corporation, Sharon
(Connecticut) Hospital, India House and New York's South Street Seaport Museum.
[PHOTO OF JOHN T. SINNOTT]
JOHN T. SINNOTT DIRECTOR SINCE 1992
Mr. Sinnott, age 62, became Chairman and Chief Executive Officer of Marsh Inc.,
a subsidiary of MMC, in 1999. Mr. Sinnott has held various executive positions
with MMC including as Vice Chairman and Chief Executive Officer of J&H Marsh &
McLennan, Inc., and prior to that as President and Chief Executive Officer of
Marsh & McLennan, Incorporated. He joined Marsh & McLennan, Incorporated in
1963.
5
CONTINUING CLASS I DIRECTORS
(TERMS EXPIRING IN 2004)
[PHOTO OF LEWIS W. BERNARD]
LEWIS W. BERNARD* *** DIRECTOR SINCE 1992
Mr. Bernard, age 60, is Chairman of Classroom, Inc., a non-profit educational
corporation. He retired in 1991 from Morgan Stanley & Co., Inc., where for
almost 30 years he held numerous positions, including that of chief
administrative and financial officer. Mr. Bernard is chairman of the board of
the American Museum of Natural History and the John and Mary R. Markle
Foundation. He is vice chairman of the J. Paul Getty Trust and a trustee of The
Andrew W. Mellon Foundation.
[PHOTO OF MATHIS CABIALLAVETTA]
MATHIS CABIALLAVETTA DIRECTOR SINCE 2000
Mr. Cabiallavetta, age 57, was appointed Vice Chairman of MMC in 1999. Prior
thereto he was chairman of the board of directors of UBS A.G. He is a past
member of the board of the Swiss National Bank, the International Capital
Markets Advisory Committee of the Federal Reserve Bank and the International
Advisory Board of the World Economic Forum, Davos. He also served as a vice
chairman of the board of directors of the Swiss Bankers Association. He is a
director of HBM BioVentures AG in Switzerland.
[PHOTO OF ROBERT F. ERBURU]
ROBERT F. ERBURU*** DIRECTOR SINCE 1996
Mr. Erburu, age 71, retired as Chairman of the Board of The Times Mirror
Company, a Los Angeles-based news and information company, on January 1, 1996, a
position he had held since 1986. Mr. Erburu served as Chief Executive Officer of
The Times Mirror Company from 1981 to 1995. He is Chairman of the Boards of the
National Gallery of Art, the Pacific Council on International Policy and the
Board of Councilors of the College of Letters, Arts and Science of the
University of Southern California. He is also Chairman Emeritus of the
Huntington Library and the J. Paul Getty Trust and a trustee of The William and
Flora Hewlett Foundation, the Ahmanson Foundation, the Ralph M. Parson
Foundation, the Fletcher Jones Foundation and the Carrie Estelle Doheny
Foundation.
[PHOTO OF OSCAR FANJUL]
OSCAR FANJUL** DIRECTOR SINCE 2001
Mr. Fanjul, age 52, is Chief Executive Officer of Omega-Capital, a private
investment firm in Spain. He was the first chairman and chief executive officer
of Repsol, S.A. from its creation in 1986 until 1996 and is currently honorary
chairman of the company. He was Chairman of N.H. Hotels from 1997 until 1999 and
of Hidroelectrica del Cantabrico from 1999 to 2001. Mr. Fanjul is a member of
the boards of Banco Bilbao Vizcaya Argentaria (BBVA), Acerinox, Tecnicas
Reunidas, the London Stock Exchange and Unilever (Advisory director). He is also
a member of MMC's International Advisory Board, an international advisor to
Goldman Sachs, and a member of the European Advisory Board of The Chubb
Corporation.
6
[PHOTO OF RAY J. GROVES]
RAY J. GROVES DIRECTOR SINCE 1994
Mr. Groves, age 66, was named senior advisor to MMC in August 2001 and became
President and Chief Operating Officer of Marsh Inc. in October 2001. Prior to
joining MMC, he was Chairman of Legg Mason Merchant Banking, Inc., a position he
held since 1995. Mr. Groves retired in 1994 from Ernst & Young where he had held
numerous positions for 37 years, including the last 17 years as Chairman and
Chief Executive Officer. He is a director of American Water Works Company, Inc.,
Boston Scientific Corporation and Electronic Data Systems Corporation. He is
also a managing director, treasurer and secretary of the Metropolitan Opera
Association and a director and former chairman of The Ohio State University
Foundation.
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* Member of the Executive Committee, of which Mr. Greenberg is Chairman.
** Member of the Audit Committee, of which Mr. Hardis is Chairman.
*** Member of the Compensation Committee, of which Mr. Bernard is Chairman.
DIRECTORS' COMPENSATION
As compensation for their services, Messrs. Bernard, Erburu, Fanjul,
Hardis, Lang, Olsen, and Smith, and Ms. King and Mrs. Simmons, each receive a
basic retainer of $40,000 per year and an annual grant of 900 shares of stock
(the "Annual Stock Grant"). These directors also receive a fee of $1,000, and
reimbursement of related expenses for each meeting of the Board or a committee
they attend. The chairman of each committee (other than Mr. Greenberg as
Chairman of the Executive Committee) receives an additional retainer of $5,000
per year; other members of committees receive an additional retainer of $2,000
per year. Directors who are also employees receive no specific compensation for
their services as directors or members of any committee.
Under the terms of MMC's Directors Stock Compensation Plan, the directors
receive twenty-five percent of the basic retainer in shares of stock at the fair
market value thereof, as well as their Annual Stock Grant on each June 1. The
balance of their compensation (including attendance fees and committee
retainers) is paid in shares of stock or cash as the director elects. The
directors may defer receipt of all or a portion of their compensation to be paid
in shares until the year following either their retirement from the Board or a
specified earlier date.
In 1999, directors were permitted to invest on an after-tax, out-of-pocket
basis in a fund that is a limited partner of Trident II, L.P. ("Trident II"), a
$1.4 billion private equity fund managed by MMC Capital. Neither the directors
nor their fund are required to pay a carried interest or other fee in connection
with their investments.
As of June 1, 2000 MMC has had a Consulting Agreement with A.J.C. Smith,
pursuant to which Mr. Smith provides certain advisory and consultative services
for MMC or its affiliates; serves as Chairman of MMC's International Advisory
Board and is a Trustee of various Putnam Funds. For these services MMC pays him
$1,250,000 per year plus support and other services and business expense
reimbursement. On May 24, 2001 the term of this Agreement was extended to
continue through May 31, 2002. For services rendered in 2001, Mr. Smith was
awarded a bonus of $1,250,000.
Mr. Fanjul, prior to joining MMC's Board of Directors, was paid $37,500 in
2001 for his services as a member of MMC's International Advisory Board. Mr.
Fanjul continues to serve on MMC's International Advisory Board but receives no
additional compensation for such service.
7
BOARD COMMITTEES AND MEETINGS
THE EXECUTIVE COMMITTEE has all the powers of the Board, when it is not in
session, in the management of the business and affairs of MMC, except as
otherwise provided in MMC's by-laws or in resolutions of the Board and under
applicable law. The Executive Committee held no meetings during 2001.
THE AUDIT COMMITTEE assists the Board in fulfilling its oversight
responsibilities with respect to (i) the annual financial information to be
provided to stockholders and the Securities and Exchange Commission ("SEC");
(ii) the system of internal controls that management has established; and (iii)
the internal and external audit process. In addition, the Audit Committee
provides an avenue for communication between internal audit, the independent
accountants, financial management and the Board. The Board of Directors has
determined that all members of the Audit Committee are independent as required
by the applicable listing standards of the New York Stock Exchange. The Audit
Committee is required to meet at least four times annually and as many
additional times as the Audit Committee deems necessary. The Audit Committee
held seven meetings during 2001.
THE COMPENSATION COMMITTEE determines the compensation of MMC's Chief
Executive Officer, approves the compensation of other senior executives of MMC
and approves the retention by MMC of consultants, as may be required, on matters
relating to the compensation of the Chief Executive Officer and senior
executives of MMC. In addition, the Compensation Committee administers MMC's
stock-based award plans. The Compensation Committee held eight meetings during
2001.
THE BOARD held eight meetings during 2001. The average attendance by
directors at the meetings of the Board and committees thereof was 95.7% and all
directors attended at least 75% of the meetings of the Board and committees on
which they served.
EMPLOYMENT AGREEMENTS
Putnam Investments ("Putnam"), a subsidiary of MMC, has an employment
agreement with Lawrence J. Lasser, its President and Chief Executive Officer
(the "Lasser Agreement") dated December 31, 1997, and amended in 2001. The term
of the Lasser Agreement expires on December 31, 2005. MMC has certain
obligations and has guaranteed Putnam's obligations under the Lasser Agreement.
MMC has also agreed to use its best efforts to include Mr. Lasser on the
management slate of nominees for directors when his current term expires at the
2003 Annual Meeting of Stockholders.
Under the Lasser Agreement, Mr. Lasser receives an annual salary of
$1,000,000 and is eligible for annual bonuses under MMC's Senior Management
Incentive Compensation Plan. Upon his retirement (or at the time he is no longer
subject to certain limitations imposed by the Internal Revenue Code with respect
to the tax deductibility of his compensation ("162(m) Limitations")), Mr. Lasser
will receive a special retirement benefit in consideration for a non-competition
covenant and post-employment consulting arrangement. The then estimated present
value equivalent of this benefit, $15,000,000, is deemed invested from December
31, 1997 in various Putnam funds.
In March 2001, Mr. Lasser received options to acquire 50,000 shares of MMC
stock, 100,000 restricted stock units of Putnam ("Putnam Restricted Stock
Units") relating to Class B common shares of Putnam ("Class B Shares") and
options ("Putnam Options") expiring on March 15, 2011 to acquire 50,000 Class B
shares. Mr. Lasser is entitled to an additional award of options on 50,000
shares of MMC stock in March of each of 2002, 2003 and 2004; and an additional
award of options on 50,000 Class B Shares in March of 2002. The options all
become exercisable 25% a year beginning one year from grant or upon the
happening of certain corporate events. The grant of Putnam restricted stock
units includes the right to receive dividend equivalents equal in value to
dividends paid on outstanding Putnam class A common shares.
Pursuant to the Lasser Agreement, Mr. Lasser was also granted a deferred
special payment ("Putnam Fund Payment") equal to the value, as of February 15,
2001, of 150,000 MMC shares. Such amount is deemed invested in Putnam funds in
accordance with Mr. Lasser's direction and vests on December 31, 2005. The
Putnam Fund Payment shall be paid to Mr. Lasser on the later of
8
December 31, 2005 or the date upon which he is no longer subject to 162(m)
Limitations, unless Mr. Lasser is terminated for cause or terminates his own
employment (other than for "Good Cause") prior to December 31, 2005. The Putnam
Fund Payment will be forfeited if Mr. Lasser violates the non-competition
covenant. This payment will vest and become payable upon Mr. Lasser's
termination of employment due to death, disability, Good Cause, or by Putnam or
MMC without cause.
If Mr. Lasser's employment is terminated by Putnam or MMC without cause or
if he terminates his employment for "Good Cause", Mr. Lasser will receive a
payment equal to his base salary and annual bonus for the balance of the term of
the Lasser Agreement. The Lasser Agreement provides for accelerated vesting, or
forfeiture of Putnam restricted stock units, Putnam options, MMC restricted
stock units and MMC options upon certain terminations of Mr. Lasser's
employment. Equity based awards granted pursuant to the original employment
agreement, which would have expired on December 31, 2001, are not forfeited upon
employment terminating after that date.
If any payments under the Lasser Agreement attributable to (i) the Putnam
options to acquire 175,000 Class B shares granted on December 31, 1997, (ii) the
150,000 Putnam restricted stock units vesting on December 31, 2001, (iii) the
MMC options, (iv) MMC restricted stock units, or (v) the Putnam Fund Payment are
subject to the excise tax imposed under the Federal tax laws, MMC will increase
the payment to Mr. Lasser as necessary to restore him to the same after-tax
position had the excise tax not been imposed.
"Good Cause" is defined generally to include (a) an uncured breach by
Putnam or MMC of a material term of the Lasser Agreement; (b) a relocation of
Putnam's executive offices or a reassignment of Mr. Lasser to a location outside
of the Boston area; (c) the failure to pay Mr. Lasser a minimum annual bonus
equal to the sum of (i) two times the bonus amount corresponding to a
pre-assigned partnership interest of 5% under Putnam's Partners Incentive
Compensation Plan with a specified base partnership percentage plus (ii) an
amount corresponding to one unit under Putnam's Operating Heads Incentive
Compensation Plan; (d) failure to grant the additional equity-based awards
described above; (e) a change in control of MMC (as described in footnote 3 to
the "Summary Compensation Table" below); or (f) a change in control of Putnam
(defined to mean that MMC no longer owns more than 50% of Putnam).
MMC has an agreement with Ray J. Groves, the President and Chief Operating
Officer of Marsh Inc. Pursuant to the terms of the agreement, which expires in
August of 2004, Mr. Groves receives an annual salary of $800,000 subject to
annual review, a guaranteed cash bonus for 2001 of $250,000 and beyond 2001 is
eligible for a bonus consistent with that provided for MMC's senior executives
and reflecting both Company and individual performance. Upon his employment in
August 2001, Mr. Groves received 10,000 shares of MMC restricted stock and
options to purchase 100,000 shares of MMC stock, subject to certain vesting
requirements, and is eligible for future grants of restricted stock and options.
SECURITY OWNERSHIP
The following table reflects the number of shares of stock beneficially owned by
persons known to MMC to own more than 5% of the outstanding shares:
AMOUNT PERCENT OF
BENEFICIALLY STOCK OUTSTANDING
NAME AND ADDRESS OWNED AT DECEMBER 31, 2001
- -------------------------------- ------------ --------------------
Wellington Management Company, LLP(1) .... 14,137,449 5.15%
75 State Street
Boston, MA 02109
- ----------
(1) Based upon the number of shares listed in a Schedule 13G filed with the
Securities and Exchange Commission by Wellington Management Company, LLP on
February 12, 2002.
9
SECURITY OWNERSHIP OF MANAGEMENT
The following table reflects as of February 28, 2002 (except with respect
to interests in MMC's Stock Investment Plan and Stock Investment Supplemental
Plan, which are as of December 31, 2001) the number of shares of common stock
which each director, each nominee and each named executive officer has reported
as owning beneficially or otherwise having a pecuniary interest in, and which
all directors, nominees and executive officers of MMC have reported as owning
beneficially as a group.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP (1)
-------------------------------------
SOLE VOTING OTHER THAN
AND SOLE VOTING
INVESTMENT AND INVESTMENT
NAME POWER POWER (2) TOTAL
- ---- ---------- -------------- ---------
Lewis W. Bernard ......................... 3,000 25,370 28,370
Mathis Cabiallavetta ..................... 563 153,121 153,684
Peter Coster ............................. 20,405 435,891 456,296
Charles A. Davis ......................... 11,374 243,262 254,636
Robert F. Erburu ......................... 0 17,247 17,247
Oscar Fanjul ............................. 97 0 97
Jeffrey W. Greenberg ..................... 50,137 718,707 768,844
Ray J. Groves ............................ 1,747 33,103 34,850
Stephen R. Hardis ........................ 1,000 4,922 5,922
Gwendolyn S. King ........................ 0 3,703 3,703
Lord Lang ................................ 2,129 900 3,029
Lawrence J. Lasser ....................... 0 413,749 413,749
David A. Olsen ........................... 226,967 95,018 321,985
Morton O. Schapiro ....................... 0 0 0
Adele Simmons ............................ 118,607 92,560 211,167
John T. Sinnott .......................... 49,278 437,726 487,005
A.J.C. Smith ............................. 548,739 1,072,577 1,621,316
All directors, nominees and
executive officers as a group,
including the above (20 individuals) ... 1,049,728 4,124,022 5,173,750
- ----------
(1) As of February 28, 2002, no director or named executive officer
beneficially owned more than 1% of the outstanding stock, and all directors
and executive officers as a group beneficially owned approximately 1.63% of
the outstanding stock.
(2) Includes shares of stock: (i) that are held in the form of shares of
restricted stock; (ii) that are held indirectly for the benefit of such
individuals or jointly, or directly or indirectly for certain members of
such individuals' families, with respect to which beneficial ownership in
certain cases may be disclaimed; and (iii) that represent such individuals'
interests in MMC's Stock Investment Plan. Also includes MMC stock units
that are subject to issuance in the future with respect to the Directors
Stock Compensation Plan, cash bonus deferral plans, MMC's Stock Investment
Supplemental Plan or restricted stock units in the following aggregate
amounts: Mr. Bernard, 25,370 shares; Mr. Cabiallavetta, 40,142 shares; Mr.
Coster, 65,849 shares; Mr. Davis, 53,894 shares; Mr. Erburu, 17,247 shares;
Mr. Greenberg, 57,829 shares; Mr. Groves, 23,103 shares; Mr. Hardis, 4,922
shares; Ms. King, 3,503 shares; Mr. Lasser, 208,049 shares; Mrs. Simmons,
12,214 shares; Mr. Sinnott, 86,960 shares; Mr. Smith, 48,513 shares; and
all directors and executive officers as a group, 711,781 shares.
Additionally, includes shares of stock which may be acquired on or before
April 30, 2002 through the exercise of stock options as follows: Mr.
Cabiallavetta, 112,500 shares; Mr. Coster, 295,000 shares; Mr. Davis,
172,500 shares; Mr. Greenberg, 592,500 shares; Mr. Lasser, 132,500 shares;
Mr. Sinnott, 227,500 shares; Mr. Smith, 1,000,000 shares; and all directors
and executive officers as a group, 2,772,500 shares.
10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth cash and other compensation paid or accrued
for services rendered in 2001, 2000 and 1999 to the Chief Executive Officer and
each of the other five most highly compensated executive officers of MMC.
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------- ---------------------------------------------------
NAME AND OTHER ANNUAL RESTRICTED SECURITIES LTIP ALL OTHER
PRINCIPAL COMPENSATION STOCK UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($)(1) ($)(2) AWARDS ($)(3) OPTIONS (#) ($)(4) ($)(5)
- -------------------------- ---- --------- ---------- ------------ ------------ ---------- --------- ------------
Jeffrey W. Greenberg ...... 2001 1,200,000 2,500,000 188,642 2,339,118 200,000 -- 48,902
Chairman and Chief 2000 1,200,000 1,500,000 -- 4,101,064 200,000 350,000 48,900
Executive Officer 1999 1,000,000 1,300,000 -- 1,181,528 150,000 1,467,374 41,750
Marsh & McLennan
Companies, Inc.
Lawrence J. Lasser ........ 2001 1,000,000 17,000,000 -- 1,000,003 50,000 -- 253,000
President 10,627,000(6) 50,000(7)
Putnam Investments, LLC 2000 1,000,000 33,000,000 -- 1,000,028 -- -- 243,000
1999 1,000,000 26,000,000 -- 77,139 -- -- 150,000
8,081,850(6) 105,000(7)
John T. Sinnott ........... 2001 900,000 1,200,000 165,943 1,380,953 60,000 -- 51,300
Chairman 2000 900,000 800,000 180,894 1,250,027 50,000 -- 51,300
Marsh Inc. 1999 850,000 550,000 226,347 892,066 50,000 -- 48,450
Peter Coster .............. 2001 950,000 750,000 198,051 1,791,943 70,000 -- 54,863
President 2000 900,000 800,000 132,921 1,227,165 60,000 -- 51,975
Mercer Consulting 1999 850,000 650,000 230,329 813,634 50,000 -- 49,088
Group, Inc.
Mathis Cabiallavetta ...... 2001 800,000 875,000 -- 1,316,413 100,000 -- 46,200
Vice Chairman 2000 700,000 800,000 -- 1,053,505 100,000 -- 27,125
Marsh & McLennan 1999 433,333 600,000 -- 553,438 50,000 -- --
Companies, Inc.
Charles A. Davis .......... 2001 800,000 875,000 -- 1,346,413 100,000 -- 32,001
Vice Chairman 2000 750,000 800,000 -- 1,227,561 100,000 105,000 30,000
Marsh & McLennan 1999 675,000 650,000 -- 843,731 50,000 699,680 24,000
Companies, Inc.
President
MMC Capital, Inc.
- ----------
(1) Mr. Davis deferred a portion of his bonus in respect of 1999, 2000 and
2001, and Mr. Lasser deferred a portion of his bonus in respect of 2000,
pursuant to plans under which participants may elect to invest their
deferred amounts on a notional basis in various investment alternatives,
including indirectly in private equity funds managed by MMC subsidiaries
and affiliated firms.
(2) Represents payments to cover tax liabilities arising from funding annuities
under the Benefit Equalization and Supplemental Retirement Programs, which
are part of MMC's United States retirement program.
(3) At December 31, 2001, each individual in the Summary Compensation Table had
outstanding shares of restricted stock and restricted stock units of MMC
with an aggregate value as follows: Mr. Greenberg, 66,650 shares and 56,746
units worth $7,161,543 and $6,097,358, respectively; Mr. Lasser, 84,900
shares and 208,049 units worth $9,122,505 and $22,354,865, respectively;
Mr. Sinnott, 81,700 shares and 63,373 units worth $8,778,665 and
$6,809,429, respectively; Mr. Coster, 84,200 shares and 36,700 units worth
$9,047,290 and $3,943,415, respectively; Mr. Cabiallavetta, 30,616 units
worth $3,289,689 and Mr. Davis, 16,300 shares and 33,821 units worth
$1,751,435 and $3,634,060 respectively. Holders of shares of restricted
stock receive the same dividends as those paid on the outstanding shares of
stock and such shares generally vest on the January 1 following the tenth
anniversary of the date of grant. Holders of restricted stock units receive
dividend equivalents that are equal in value to dividends paid on the
outstanding shares of common stock
11
and such units generally vest three years from the date of grant. Vesting
of restricted stock and restricted stock units may be accelerated upon a
change in control. "Change in Control" of MMC means generally any "person"
owning securities with 50% or more of the voting power of MMC; within a
two-year period (with certain exceptions) a change in directors
constituting a majority of the Board; a merger or consolidation of MMC
resulting in MMC stockholders not owning securities with 50% or more of the
voting power of the surviving entity; or approval of an agreement for the
sale or disposition of all or substantially all of MMC's assets. Under the
MMC Special Severance Pay Plan, holders of restricted stock or awards in
lieu of restricted stock with at least 10 years of service will receive
payment in shares of stock upon forfeiture of their award if their
employment with MMC terminates. The amount of such payment is based on
years of service, with the individual receiving up to a maximum of 90% of
the value of the restricted shares after 25 years of service, and is
subject to execution of a non-solicitation agreement.
(4) Under MMC Capital's Long Term Incentive Plan ("LTIP") Mr. Davis and Mr.
Greenberg have received various awards, including carried interests. The
LTIP currently operates as an incentive compensation pool that varies in
amount based on the extent of MMC's investment return and fees from
originating, structuring and managing certain insurance and related
industry investments in which MMC has direct or indirect interests. As of
December 31, 2001, the estimated value of Mr. Greenberg's and Mr. Davis'
interest in any future payouts under the LTIP (including their carried
interests) aggregated approximately $2.5 million and $1.8 million,
respectively, in each case based on a liquidation value as of that date and
subject to realization of estimated returns and including awards with
respect to fees received and realized gains not yet distributed. The
vesting schedule for carried interest awards made under the LTIP were
determined at the date of grant and will accelerate upon a change in
control of MMC (as described in footnote 3 above), a change in control of
MMC Capital (defined to mean that MMC no longer owns more than 50% of MMC
Capital), or upon the retirement, death or disability of the participating
executive.
In addition, in 1999, Mr. Greenberg purchased both general and limited
partnership interests in the general partner of Trident II, and in 1999 and
2000, Mr. Davis purchased both general and limited partnership interests in
the general partners of four private equity funds managed by MMC Capital,
including Trident II. These purchases were on an after-tax, out-of-pocket
basis. In connection with these partnership interests, Mr. Greenberg and
Mr. Davis received participations in carried interests in these funds. In
2000, Mr. Greenberg and Mr. Davis received $237,267 and $382,562,
respectively, in connection with their carried interests. At this time, it
is not meaningful to project values of the carried interest participations.
The carried interests are subject to reduction or forfeiture in connection
with terminations of employment. However, in the event of a change in
control of MMC or MMC Capital prior to a termination of employment other
than for cause, the carried interests cannot be so reduced or forfeited,
even with respect to subsequent investments. From time to time, Mr.
Greenberg and Mr. Davis may be excused from participating in a particular
investment (such as Mr. Greenberg from the Trident II investment in
Sedgwick CMS Holdings, Inc.) in order to avoid the appearance of any
inappropriate remuneration or as otherwise deemed advisable. See
"Transactions with Management and Others; Other Information". Additionally,
in 1999 and 2000, Messrs. Greenberg, Lasser, Sinnott, Coster, and Davis,
either in their capacities as employees of MMC or its subsidiaries or as
directors of MMC, purchased, on an after-tax, out-of-pocket basis, limited
partnership interests in one or more funds that invest in or alongside
private equity funds managed by MMC subsidiaries and affiliated firms.
Neither these individuals nor their funds are required to pay a carried
interest or other fee, except in some cases an administrative fee, in
connection with these investments.
(5) Represents for 2001 (a) MMC matching contributions under the Stock
Investment Plan of $7,010 for Mr. Greenberg, $7,838 for Mr. Sinnott, $9,963
for Mr. Coster, $10,000 for Mr. Cabiallavetta and $3,000 for Mr. Davis, and
under the Stock Investment Supplemental Plan of $41,892 for Mr. Greenberg,
$43,463 for Mr. Sinnott, $44,900 for Mr. Coster, $36,200 for Mr.
Cabiallavetta and $29,001 for Mr. Davis and (b) contributions by Putnam
Investments of $25,500 to the Putnam Profit Sharing Retirement Plan and
$124,500 to the Putnam Executive Deferred Compensation Plan for Mr. Lasser.
Additionally, Mr. Lasser received $103,000 from MMC for his service as a
trustee of the Putnam Funds.
(6) At December 31, 2001, Mr. Lasser had 152,500 restricted stock units of
Putnam Class B Shares with an estimated aggregate value of $11,371,925. All
grants of Putnam restricted stock units include the right to dividend
equivalents that are equal in value to dividends paid on the outstanding
Class A Shares of Putnam. The Putnam restricted stock units vest at a rate
of 25% a year beginning with the first anniversary of the date of the
grant. Upon the happening of certain corporate events affecting Putnam or
MMC, vesting of shares of Putnam restricted stock units may be accelerated.
(7) Mr. Lasser was granted Putnam options, which become exercisable 25% a year
beginning one year from the date of grant. The exercise price of the Putnam
options may be paid in cash or in Class B Shares of Putnam. Upon the
happening of certain corporate events affecting Putnam or MMC, all Putnam
options will become fully exercisable.
12
STOCK OPTION GRANTS IN 2001
The following table sets forth certain information concerning MMC stock
options granted during 2001 to the Chief Executive Officer and each of the other
five most highly compensated executive officers of MMC. The table also sets
forth certain information concerning stock options to purchase Putnam Class B
Shares granted to Mr. Lasser in 2001.
INDIVIDUAL GRANTS(1)
------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION --------------------------------
NAME GRANTED IN 2001 ($/SH) DATE 5% ($) 10%($)
- ------ ----------- ---------- -------- ---------- -------------- --------------
Jeffrey W. Greenberg ...... 200,000 2.5% 92.20 03/14/20 1111,596,817 29,388,611
Lawrence J. Lasser ........ 50,000 0.6% 92.20 03/14/20 112,899,204 7,347,153
50,000(3) 5.5% 106.27 03/10/20 113,341,632 8,468,351
John T. Sinnott ........... 60,000 0.8% 92.20 03/14/20 113,479,045 8,816,583
Peter Coster .............. 70,000 0.9% 92.20 03/14/20 114,058,886 10,286,014
Mathis Cabiallavetta ...... 100,000 1.3% 92.20 03/14/20 115,798,408 14,694,305
Charles A. Davis .......... 100,000 1.3% 92.20 03/14/20 115,798,408 14,694,305
MMC Stockholders(4) ....... 15,906,586,695 40,310,413,750
- ----------
(1) The MMC stock options become exercisable 25% a year beginning one year from
the date of grant. The option exercise price may be paid in cash or in
shares of common stock. In the event of a change in control of MMC (as
described in footnote 3 to the "Summary Compensation Table" above), all
stock options will become fully exercisable and vested, and any
restrictions contained in the terms and conditions of the option grants
shall lapse. If any payments made in connection with a change in control
are subject to the excise tax imposed under the Federal tax laws, MMC will
increase the option holder's payment as necessary to restore such option
holder to the same after-tax position had the excise tax not been imposed.
(2) The dollar amounts are the result of calculations at the 5% and 10% growth
rates set by the SEC; the rates are not intended to be a forecast of future
stock price appreciation. A zero percent stock price growth rate will
result in a zero gain for all optionees.
(3) Mr. Lasser was granted an option to acquire Putnam Class B Shares which
become exercisable 25% a year beginning on March 10, 2002. The fair market
value of each Putnam Class B Shares on the date of grant was $106.27.
(4) The dollar amounts are included for comparative purposes to show the gain
that would be achieved by the holders of the outstanding stock of MMC at
the assumed stock price appreciation rates at the end of the 10-year term
of the MMC options granted on March 15, 2001 at an exercise price of
$92.20.
13
AGGREGATED STOCK OPTION EXERCISES IN 2001 AND STOCK OPTION VALUE AT
DECEMBER 31, 2001
The following table sets forth certain information concerning stock options
exercised during 2001 by the Chief Executive Officer and each of the other five
most highly compensated executive officers of MMC and the number and value of
specified unexercised options at December 31, 2001. The value of unexercised
in-the-money stock options at December 31, 2001 shown below is presented
pursuant to SEC rules and, with respect to MMC stock, is based on the December
31, 2001 closing price on the New York Stock Exchange of $107.45 per share and,
with respect to the Putnam Class B Shares, is based on an agreed valuation
methodology for determining fair market value which at December 31, 2001 was
$74.57 per share. The actual amount, if any, realized upon exercise of stock
options will depend upon the market price of the stock relative to the exercise
price per share at the time the stock option is exercised. There is no assurance
that the values of unexercised in-the-money stock options reflected in this
table will be realized.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXCERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2001 DECEMBER 31, 2001
ACQUIRED ON VALUE ---------------------------------- ---------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE ($) UNEXERCISABLE($)
- ---- ------------ ------------ --------------- ----------------- --------------- ----------------
Jeffrey W. Greenberg -- -- 440,000 440,000 26,129,094 7,911,594
Lawrence J. Lasser 15,000 1,147,538 135,000 50,000 7,996,688 762,500
-- -- 377,500(1) 102,500(1) 9,612,250 0
John T. Sinnott 50,000 3,791,709 221,250 133,750 13,482,687 2,408,500
Peter Coster 120,000 9,160,400 238,750 151,250 14,630,093 2,593,906
Mathis Cabiallavetta -- -- 50,000 200,000 819,374 2,563,749
Charles A. Davis -- -- 95,000 215,000 3,123,531 3,390,656
- ----------
(1) Represents options to acquire Putnam Class B Shares.
14
UNITED STATES RETIREMENT PROGRAM
MMC maintains a United States retirement program consisting of the Marsh &
McLennan Companies Retirement Plan, a non-qualified Benefit Equalization Program
and a non-qualified Supplemental Retirement Program.
The following table shows the estimated annual straight-life annuity
benefit payable (or in the case of those covered by the Benefit Equalization and
Supplemental Retirement Programs, the before-tax equivalents of the after-tax
benefits received) under these retirement programs to employees with the
specified Maximum Average Salary (average salary over the 60 consecutive months
of employment that produces the highest average) and specified years of service
upon retirement at age 65, after giving effect to adjustments for Social
Security benefits:
YEARS OF SERVICE
---------------------------------------------------------------
MAXIMUM
AVERAGE SALARY 5 10 20 30 40
- -------------- ---------------------------------------------------------------
$800,000 $76,016 $152,032 $304,064 $444,080 $524,080
$900,000 $86,016 $172,032 $344,064 $502,080 $592,080
$1,000,000 $96,016 $192,032 $384,064 $560,080 $660,080
$1,100,000 $106,016 $212,032 $424,064 $618,080 $728,080
$1,200,000 $116,016 $232,032 $464,064 $676,080 $796,080
$1,300,000 $126,016 $252,032 $504,064 $734,080 $864,080
$1,400,000 $136,016 $272,032 $544,064 $792,080 $932,080
$1,500,000 $146,016 $292,032 $584,064 $850,080 $1,000,080
$1,600,000 $156,016 $312,032 $624,064 $908,080 $1,068,080
$1,700,000 $166,016 $332,032 $664,064 $966,080 $1,136,080
$1,800,000 $176,016 $352,032 $704,064 $1,024,080 $1,204,080
The compensation of participants used to calculate the retirement benefit
consists of regular salary as disclosed in the "Salary" column of the Summary
Compensation Table and excludes bonuses and other forms of compensation not
regularly received. For the six individuals named above, other than Mr. Lasser
who participates in the Putnam Profit Sharing Retirement Plan and related plans
and not in MMC's U.S. retirement program, the 2001 compensation used to
calculate the Maximum Average Salary and the number of years of credited service
are as follows: Mr. Greenberg, $1,200,000, 6 years; Mr. Sinnott, $900,000, 39
years; Mr. Coster, $950,000, 40 years; Mr. Cabiallavetta, $800,000, 3 years; and
Mr. Davis, $800,000, 4 years. Mr. Lasser is also entitled to receive a special
retirement benefit in accordance with the terms of the Lasser Agreement. See
"Employment Agreement" above.
15
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY, POLICIES AND PLANS FOR EXECUTIVE OFFICERS
MMC is a professional services firm with businesses having distinct
economic characteristics, marketplaces and operating conditions. The leadership
position attained over time by MMC's operating subsidiaries in their respective
businesses in terms of services provided, market share, revenue, profitability
and rate of growth has been earned largely through the selection, training and
development of top caliber executive, managerial and professional talent.
Ongoing investment in the firm's human capital has produced favorable long-term
returns to MMC stockholders. Therefore, it is critical to the ongoing success of
MMC that its executives continue to be among the most highly qualified and
talented professionals available in their respective business segments to lead
the organization in the creation of stockholder value.
The Compensation Committee of the Board, all of whose members are
disinterested outside directors, is charged by MMC's by-laws with ensuring that
MMC's compensation philosophy and policies, which are intended to attract,
retain and motivate highly capable and productive employees, are in MMC's best
interests. To that end, MMC's executive compensation program is designed to
reinforce business strategies, reflect marketplace practices and dynamics, and
provide cost and tax effective forms of remuneration. The Committee reviews the
program regularly to consider and implement any changes necessary to achieve
these ongoing objectives. MMC's philosophy regarding incentives and rewards is
implemented through compensation policies and plans intended to enhance
financial performance in a highly competitive marketplace, which includes
competition from privately-held firms offering attractive equity ownership
opportunities. In terms of compensation data, the Committee periodically reviews
the levels of executive compensation from a number of survey sources, with a
focus on pay data available relating to professional talent among MMC's
businesses. In addition, the Committee periodically evaluates chief executive
officer compensation by comparing it to data developed from a selected group of
20 major corporations in professional services, diversified financial, banking
and insurance sectors. This selective grouping is broader than the peer grouping
in the Comparison of Cumulative Total Stockholder Return in order to obtain a
meaningful representation of competitive compensation practices and levels for
senior executive positions.
The Chief Executive Officer of MMC heads a group of senior management
officers, most of whom are executives of MMC's operating subsidiaries. These
senior officers participate in various compensation plans and are paid in
accordance with award guidelines and performance criteria that reflect overall
MMC and individual operating unit performance. The plans, which include
short-term and long-term elements, are intended to be retrospective, reflecting
prior individual and organizational performance, as well as prospective,
providing motivation and rewards for achieving future success. Such compensation
is designed to reflect the combined annual and long-term performance of MMC, the
operating subsidiary and the employee. Moreover, individual contributions by
these executives are assessed in the context of a top management team that views
itself as a professional partnership.
Members of the senior management group of Putnam Investments participate in
a different compensation program, which is based on competitive practices in the
investment management industry. In terms of annual incentives, these employees
are eligible for bonuses that are determined based on the absolute and
incremental profit of Putnam. With regard to long-term incentives, these
employees are eligible to receive periodic awards of Putnam restricted stock and
stock options with respect to Class B shares of Putnam. Since employees of
Putnam participate in a separate compensation program, statistics provided in
the following sections of this report relating to the compensation of MMC's
senior management group exclude Putnam employees.
SHORT-TERM COMPENSATION (SALARY AND ANNUAL INCENTIVE AWARDS)
With regard to short-term compensation, salaries are reviewed annually, and
increases are granted by the Committee on a discretionary basis in consideration
of current individual and organizational performance, role, affordability and
market-
16
place practices. Organizational performance refers to the business unit's
success in achieving business objectives and addressing conditions affecting
long-term growth and profits. For participants in the senior management
compensation program, salaries are compared to the top quartile of the relevant
marketplace, with aggregate annual cash compensation adjusted to reflect MMC's
performance. Salaries accounted for 34% of total compensation (excluding stock
options) in 2001 for MMC's senior management group.
The size of the incentive award pool for senior management cash bonuses is
based on earnings and reflects MMC's net operating income growth. However, the
Committee may, in its sole discretion, authorize a payout of less than the full
bonus pool. In this regard, a specific target level is not established for the
award pool, nor, absent any contractual obligations, are minimum award levels
guaranteed for bonus recipients. With respect to individual award
determinations, such assessments by the Committee are largely judgmental, not
formulaic, weighing the Chief Executive Officer's recommendation and evaluation
as to the executive's managerial and professional role within the organization,
relative contribution (compared with the internal peer group) to the firm's
operations and earnings growth, and marketplace compensation levels. For 2001,
bonus awards at Putnam Investments reflected the financial performance of that
business, while awards to executives in MMC's other businesses were, on average,
3 percentage points above 2000 as a percentage of salary. For MMC's senior
management group, individual bonuses constituted 33% of total compensation
(excluding stock options) for 2001.
LONG-TERM COMPENSATION (RESTRICTED STOCK, RESTRICTED STOCK UNIT AND
STOCK OPTION AWARDS)
It is the Committee's strongly held belief that the continuing success of
MMC is dependent on the effectiveness of programs intended to retain and
motivate its executives. Accordingly, long-term compensation is designed to
recognize the individual's past and potential future contributions to the
organization, and to link the executive's financial interests with those of
stockholders by fostering stock ownership. Such equity ownership opportunities
for MMC executives are made available through plans that provide for restricted
stock, restricted stock unit and stock option grants. Moreover, in order to help
promote retention of key talent through stock ownership that is at risk,
ownership rights to restricted stock, restricted stock units and stock options
are acquired over time. In addition, under voluntary deferral programs, a
supplemental equity award with vesting requirements may be granted as an
incentive for long-term stock ownership.
Within this framework, absent a contractual obligation, the size of each
executive's equity grants is determined at the sole discretion of the Committee.
Such determinations include consideration of MMC's future profit performance
expectations and the individual's organizational role, current performance and
potential to contribute to the long-term success of MMC, as well as review and
consideration of the competitive practices on which award guidelines are based.
These considerations, and not prior stock-based awards or MMC stock ownership
targets, determine the size of stock grants to individuals.
Most members of MMC's senior management group are eligible to receive
annual discretionary restricted stock grants on the basis described above. In
2001, such awards for this group accounted for 21% (including supplemental
equity awards as described above) of total compensation (excluding stock
options).
A select number of participants from the executive group are also eligible
for an annual discretionary grant of restricted stock units, which are deferred
stock-based awards. The awards reflect MMC's earnings and growth, with
individual grants based on the subjective factors outlined above including each
executive's organizational role and performance. Historically, the grant value
of individual awards has ranged from approximately 50% to 150% of the
executive's cash bonus. Units earned are distributable in shares and generally
vest after completion of three years of service from the date of grant. The
restricted stock units granted in 2001 to MMC's senior management group made up
12% of total compensation (excluding stock options) for the year.
Stock options are another equity element of senior management compensation.
Members of the executive group are eligible for option grants on an annual
basis. Such grants are made without reference to present holdings of unexercised
options or appreciation thereon. The size of an individual grant reflects the
factors discussed earlier including
17
organizational role, performance and marketplace practices.
TAX CONSIDERATIONS
As noted above, MMC's executive compensation program is designed to be cost
and tax effective. The Committee's policy is to take actions that it deems to be
in the best interest of MMC and its stockholders, recognizing, however, that
payment of compensation may not in all instances qualify for tax deductibility
because of the restrictions set forth in Section 162(m) of the Internal Revenue
Code.
BASIS FOR CEO COMPENSATION
Both the quantitative and qualitative criteria referenced earlier are
applied in assessing the performance and determining the compensation of the
Chairman and Chief Executive Officer of MMC, Jeffrey W. Greenberg. Current and
long-term financial performance of MMC, information which is available to all
MMC stockholders, are major factors in arriving at the compensation
determinations made by the Committee relative to Mr. Greenberg. Consideration is
also given to his leadership and influence on the long-term strength and
performance of MMC.
The annual base salary for Mr. Greenberg during 2001 was $1,200,000,
unchanged since January 1, 2000. With regard to cash bonus, Mr. Greenberg
participates in the same MMC annual incentive plan as MMC's senior management
group. His 2001 cash bonus award under the plan was $2,500,000.
In connection with long-term compensation, Mr. Greenberg was granted 9,100
shares of restricted stock in 2001 under terms previously described. In
addition, Mr. Greenberg was granted 14,613 restricted stock units in connection
with his 2000 cash bonus. The combined value of his restricted stock and
restricted stock unit grants was $2,339,118. In addition, Mr. Greenberg was
granted 200,000 stock options during 2001.
Mr. Greenberg also participates in the MMC Capital Long Term Incentive
Plan, which is structured to reflect compensation practices in the private
equity investment industry. In addition, in 1999 Mr. Greenberg received a
carried interest in Trident II as a result of owning partnership interests in
the general partner of Trident II. In 2001, Mr. Greenberg did not receive any
cash payment in connection with such carried interest or under the LTIP although
the Compensation Committee has approved a payout under the LTIP in respect of a
2001 transaction involving a portfolio company of Trident II.
Based on the previously referenced review of chief executive officer
compensation for 2000 (latest data available), Mr. Greenberg's 2001 cash
compensation was positioned at approximately the 50th percentile of the 2000
market survey group, and his long-term compensation (including any long-term
incentive plan payouts but excluding stock options) was at about the 75th
percentile of the 2000 survey market. Mr. Greenberg was granted 200,000 stock
options during 2001, and the size of this grant approximated the 50th percentile
of the 2000 survey market. Total compensation for Mr. Greenberg in 2001, which
includes all elements of pay from the Summary Compensation Table except stock
option grants, was at about the 55th percentile of the 2000 survey market.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF MMC'S BOARD OF DIRECTORS
Lewis W. Bernard Robert F. Erburu The Rt. Hon. Lord Lang of
Monkton, DL
18
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
Mr. Ray J. Groves was a member of the Compensation Committee of the Board
prior to becoming an employee of MMC in August 2001.
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
The following graph compares MMC's cumulative total stockholder return on
its stock (assuming reinvestment of dividends) with the cumulative total return
on the published Standard & Poor's 500 Stock Index and the cumulative total
return on a Company-constructed composite industry index, consisting of Aon
Corporation, Arthur J. Gallagher & Co., Franklin Resources, Inc. and T. Rowe
Price Group, Inc., over the five-year period from December 31, 1996 through
December 31, 2001.
[LINE CHART OMITTED]
1996 1997 1998 1999 2000 2001
MMC 100 148 178 298 371 348
S&P 500 100 133 171 208 189 166
Composite Industry Index 100 161 144 157 176 190
Assumes $100 invested on December 31, 1996 with dividends reinvested.
19
TRANSACTIONS WITH MANAGEMENT AND
OTHERS; OTHER INFORMATION
From time to time, in the ordinary course of business and on commercial
terms, MMC and its subsidiaries may provide services to, or in connection with
transactions involving, investment funds and their portfolio companies managed
or advised by MMC Capital, in which various executive officers and directors of
MMC have direct or indirect interests. Such services include acting as an
insurance or reinsurance broker or providing consulting services. The aggregate
amount received for all such services rendered in 2001 by MMC and its
subsidiaries was approximately $30 million. This includes $22 million in fees
received (net of a credit to management fees owed from Trident II) as
compensation for services from a portfolio company of Trident II. A portion of
the fees received by MMC Capital or its subsidiaries from portfolio companies
for transaction, management or other advisory services is dedicated to the LTIP
pool described in footnote 4 to "Executive Compensation--Summary Compensation
Table".
Following MMC's acquisition of Sedgwick Group plc in 1998, MMC commenced a
process to sell certain Sedgwick-owned insurance companies that were in run-off.
During 2000, MMC reached an agreement in principle to sell all of the
outstanding stock of two of these entities, River Thames Insurance Company
Limited and Overseas Reinsurance Corporation Limited, to a joint venture formed
by The Enstar Group, Inc. and Castlewood Limited, a Bermuda based insurance
services provider. A definitive agreement for the sale of the companies was
executed in June 2001 and, following receipt of regulatory approval, the
transaction was closed on November 29, 2001. In connection with the closing, a
minority interest in River Thames was purchased and resold by MMC and additional
capital contributions were made by MMC and the joint venture to Overseas Re.
Sedgwick had previously provided guarantees with respect to certain obligations
of these insurance companies. One guarantee was commuted. It is expected that in
connection with this transaction certain reinsurance protection will be
purchased for one of the other guarantees. The (pound-sterling)10.6 million
purchase price paid on clOSING was based on the adjusted combined book value of
the two entities as of December 31, 2000 and was approved by MMC's Chief
Financial Officer Sandra S. Wijnberg and reported to the MMC Board. In October
2001, Trident II and Enstar each agreed to purchase one-third of the economic
interest in Castlewood and, in connection with that transaction, Enstar agreed
to transfer its interest in the joint venture to Castlewood. The sale of the two
insurance companies by MMC to the joint venture and the investment by Trident II
in Castlewood closed on November 29, 2001.
Marsh USA Inc., a wholly owned subsidiary of MMC, and Trident II are owners
of Sedgwick Claims Management Services ("SCMS"), with Marsh USA owning a 56%
interest , Trident II owning a 39% interest and the balance owned by SCMS
management. SCMS is part of MMC's consolidated reporting group. On December 14,
2001 MMC made an intercompany loan of $10 million to SCMS on commercial terms.
The loan is to be repaid in eleven quarterly payments of $500,000 plus interest,
with the balance due on December 14, 2004. The loan proceeds were used to
partially fund a $29.2 million distribution by SCMS to its stockholders. In
addition, pursuant to the original sale contract for the stock of SCMS between
Marsh USA and Trident II, Marsh USA has the right to repurchase, on October 29,
2003, all of the SCMS shares held by Trident II, provided that Marsh USA made a
$5 million payment to Trident II on or before December 31, 2001. Marsh USA
exercised its right to retain this call option in December 2001. Mr. Greenberg
has been excused from participating in Trident II's investment in SCMS.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires MMC's
directors and executive officers, and persons who own more than ten percent of
the common stock of MMC, to file with the SEC and the New York Stock Exchange
initial reports of beneficial ownership and reports of changes in beneficial
ownership of MMC stock. Such persons are also required by SEC regulation to
furnish MMC with copies of all Section 16(a) forms they file. To MMC's
knowledge, based solely on a review of the copies of such reports furnished to
MMC and written representations that no other reports were required, during 2001
all Section 16(a) filing requirements applicable to such individuals were
complied with except for one report covering one transaction filed late by Mr.
Davis.
20
ITEM 2
RATIFICATION OF DELOITTE & TOUCHE LLP
AS INDEPENDENT AUDITORS
The Board, upon the recommendation of the Audit Committee, has selected
Deloitte & Touche LLP, independent auditors, to audit the financial statements
of MMC for the fiscal year ending December 31, 2002. Deloitte & Touche LLP acted
as MMC's independent auditors for the year ended December 31, 2001.
Representatives of Deloitte & Touche LLP will attend the meeting, will have an
opportunity to make a statement if desiring to do so and will be available to
answer any pertinent questions.
The affirmative vote of a majority of the shares of MMC stock present or
represented and entitled to vote at the meeting is required to ratify the
appointment of Deloitte & Touche LLP. Unless otherwise directed in the proxy,
the persons named in the proxy will vote FOR the ratification of Deloitte &
Touche LLP. The Board recommends you vote FOR this proposal.
AUDIT FEES
The aggregate fees for professional services rendered by MMC's principal
accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche
Tohmatsu and their respective affiliates (collectively, "Deloitte & Touche") for
the audit of MMC's annual financial statements for the fiscal year ended
December 31, 2001, and for the reviews of the financial statements included in
MMC's Quarterly Reports on Form 10-Q for that fiscal year were $8,396,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The aggregate fees for professional services rendered by Deloitte & Touche
for information technology services relating to financial information systems
design and implementation for the fiscal year ended December 31, 2001 were
$2,875,000. These fees related to Marsh Inc. financial system implementation
assistance services.
ALL OTHER FEES
The aggregate fees for services rendered by Deloitte & Touche to MMC, other
than the services described above, for the fiscal year ended December 31, 2001
were $8,189,000. This includes $2,138,000 for audit related fees, including fees
for audits of employee benefit plans, computer audit services, agreed-upon
procedures and other accounting and advisory services. It also includes
$6,051,000 for tax consulting and compliance services, administrative services
related to regulatory compliance, non-financial information system services and
other non-audit related services.
AUDIT COMMITTEE REPORT
The primary function of the Audit Committee is to assist the Board of
Directors in its oversight of MMC's financial reporting process. The Committee
operates pursuant to a Charter approved by the MMC Board. Management is
responsible for MMC's financial statements and overall reporting process,
including the system of internal controls. The independent auditors are
responsible for conducting annual audits and quarterly reviews of MMC's
financial statements and expressing an opinion as to the conformity of the
annual financial statements with generally accepted accounting principles.
In the performance of its oversight function, the Committee has reviewed
and discussed the audited financial statements as of and for the year ended
December 31, 2001 with management and the independent auditors. The Committee
has also discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, COMMUNICATION WITH AUDIT
COMMITTEES. Finally, the Committee has received the written disclosures and the
letter from the independent auditors required by Independence Standards Board
Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES, has considered
whether the provision of information technology consulting services relating to
financial information systems design and implementation and other non-audit
services by the independent auditors to the Company is compatible with
maintaining the auditor's independence and has discussed with the auditors the
auditors' independence.
21
It is not the duty or responsibility of the Committee to conduct auditing
or accounting reviews or procedures. In performing their oversight
responsibility, members of the Committee rely without independent verification
on the information provided to them and on the representations made by
management and the independent accountants. Accordingly, the Audit Committee's
oversight does not provide an independent basis to determine that management has
maintained appropriate accounting and financial reporting principles or
appropriate internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. Furthermore, the Audit
Committee's considerations and discussions do not assure that the audit of MMC's
financial statements has been carried out in accordance with generally accepted
auditing standards or that the financial statements are presented in accordance
with generally accepted accounting principles.
Based upon the review and discussions described in this report, and subject
to the limitations on the role and responsibilities of the Committee referred to
above and in the Charter, the Committee recommended to the Board that the
audited financial statements referred to above be included in MMC's Annual
Report on Form 10-K for the year ended December 31, 2001 to be filed with the
Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE
OF MMC'S BOARD OF DIRECTORS
Oscar Fanjul Gwendolyn S. King
Stephen R. Hardis Adele Simmons
SOLICITATION OF PROXIES
The Board hereby solicits proxies for use at the 2002 Annual Meeting and at
any adjournment thereof. Stockholders who execute a proxy may still attend the
meeting and vote in person. A proxy may be revoked at any time before it is
voted by giving to the Secretary of MMC, at MMC's principal executive offices
indicated above, written notice bearing a later date than the proxy, by
submission of a later dated proxy or by voting in person at the meeting.
Executors, administrators, trustees, guardians, attorneys and other
representatives should indicate the capacity in which they are signing and
corporations should sign by an authorized officer whose title should be
indicated. Mere attendance at the meeting will not revoke a proxy which was
previously submitted to MMC.
The cost of this proxy solicitation is borne directly by MMC. Georgeson
Shareholder Communications Inc. has been retained to assist in the proxy
solicitation at a fee of approximately $10,000, plus expenses. In addition to
solicitation of proxies by mail, proxies may be solicited personally, by
telephone, e-mail and by facsimile by MMC's directors, officers and other
employees. Such persons will receive no additional compensation for such
services. MMC will also request brokers and other nominees to forward soliciting
material to the beneficial owners of shares which are held of record by them,
and will pay the necessary expenses.
22
MULTIPLE SHAREHOLDERS
SHARING THE SAME ADDRESS
In accordance with a notice sent earlier this year to certain street-name
shareholders who share a single address, we are sending only one annual report
and proxy statement to that address unless we received contrary instructions
from any shareholder at that address. This practice, known as "householding," is
designed to reduce our printing and postage costs. However, if any shareholder
residing at such an address wishes to receive a separate annual report or proxy
statement in the future, they may telephone Corporate Development at (212)
345-5475 or write to Corporate Development, Marsh & McLennan Companies, Inc.,
1166 Avenue of the Americas, New York, New York 10036. If you are receiving
multiple copies of our annual report and proxy statement, you can request
householding by contacting Corporate Development in the same manner.
STOCKHOLDER AND OTHER PROPOSALS
Stockholders who wish to present a proposal and have it considered for
inclusion in MMC's proxy materials for the 2003 Annual Meeting of Stockholders
of MMC must submit such proposal in writing to MMC in care of the Secretary of
MMC on or before November 30, 2002.
Stockholders who wish to present a proposal at the 2003 Annual Meeting that
has not been included in MMC's proxy materials must submit such proposal in
writing to MMC in care of the Secretary of MMC. Any such notice received by the
Secretary of MMC on or after February 15, 2003 shall be considered untimely
under the provisions of MMC's bylaws governing the presentation of proposals by
stockholders. In addition, the by-laws of MMC contain further requirements
relating to the timing and content of the notice which stockholders must provide
to the Secretary for any nomination or matter to be properly presented at a
stockholders meeting.
By order of the Board of Directors,
/s/ Gregory Van Gundy
Gregory Van Gundy
Secretary
23
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, NY 10036-2774
PROXY PROXY
MARSH & MCLENNAN COMPANIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2002 ANNUAL MEETING
FOR ALL STOCKHOLDERS
The undersigned hereby appoints Jeffrey W. Greenberg and William L.
Rosoff proxies (each with power to act alone and with the power of substitution)
of the undersigned to vote all shares which the undersigned would be entitled to
vote at the annual Meeting of Stockholders of Marsh & McLennan Companies, Inc.
to be held on Thursday, May 16, 2002 at 10:00 a.m. (New York City time) in the
auditorium, 2nd Floor, 1221 Avenue of the Americas, New York, New York and at
any adjournment thereof.
FOR STOCKHOLDERS WHO ARE ALSO PARTICIPANTS IN MARSH & McLENNAN COMPANIES STOCK
INVESTMENT PLAN, THE SEDGWICK SAVINGS AND INVESTMENT PLAN AND THE PUTNAM
INVESTMENTS PROFIT SHARING RETIREMENT PLAN
This card also constitutes the confidential voting instructions of the
participants in the Marsh & McLennan Companies Stock Investment Plan, the
Sedgwick Savings and Investment Plan and The Putnam Investments Profit Sharing
Retirement Plan. By signing and returning this card, the undersigned directs the
Trustees under each Plan, to vote in person or by proxy all shares of stock of
Marsh & McLennan Companies, Inc. (the "Company") allocated to the undersigned
under said Plans upon all matters at the Annual Meeting of Stockholders of the
Company on May 16, 2002 and at any adjournment thereof. Provided this card is
received by May 10, 2002, voting rights will be exercised by the Trustees as
directed or, if not specifically directed, FOR the items stated herein. Under
the Plans, the Trustees shall vote all other shares in the same proportion as
those shares for which it has received a signed instruction card.
INSPECTORS OF ELECTION
P.O. BOX 11466
NEWARK, N.J. 10203-0466
1. Election of Directors FOR all nominees
listed below _____
WITHHOLD AUTHORITY to vote *FOR ALL
for all nominees listed below _____ EXCEPT ____
Nominees: Jeffrey W. Greenberg, Stephen R. Hardis, The Rt. Hon. Lord
Lang of Monkton, DL, Morton O. Schapiro, Adele Simmons,
A.J.C. Smith
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW.)
*Exceptions
--------------------------------------------------------------------
2. Ratification of Deloitte & Touche LLP as independent auditors for 2002.
FOR _____ AGAINST _____ ABSTAIN ______
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTIONS ARE MADE, THEY WILL BE VOTED FOR ITEMS 1 AND
2. IN THEIR DISCRETION THE PROXY HOLDERS ARE AUTHORIZED TO VOTE UPON
ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
POSTPONEMENT THEREOF.
I AGREE TO ACCESS FUTURE PROXY CHANGE OF ADDRESS AND
STATEMENTS AND ANNUAL REPORTS OR COMMENTS MARK HERE ____
ELECTRONICALLY. ______
Sign here as name(s) appear on
card.
The signer hereby revokes all
proxies heretofore given by the
signer to vote at said meeting
or any adjournments thereof. If
signing for a corporation or
partnership or as agent,
attorney or fiduciary, indicate
capacity in which you are
signing.
Dated: __________________, 2002
_______________________________
_______________________________
Votes must be indicated
(x) in Black or Blue ink. _____
PLEASE RETURN THS CARD PROMPTLY USING THE ACCOMPANYING ENVELOPE
[MMC VOTE BY TELEPHONE OR INTERNET OR MAIL
LOGO] 24 HOURS A DAY - 7 DAYS A WEEK
It's Fast and Convenient
- --------------------------------------------------------------------------------
- -------------------------------- -----------------------------------
TELEPHONE INTERNET
866-358-4700 OR http://www.proxyvotenow.com/mmc OR
- -------------------------------- -----------------------------------
o Use any touch-tone telephone. o Go to the website address
listed above.
o Have your Proxy Form in hand.
o Have your Proxy Form in hand.
o Enter the control number,
located in the box below. o Enter the control number,
located in the box below.
o Follow the simple recorded
instructions. o Follow the simple
instructions.
- ---------------------------------------
MAIL
- ---------------------------------------
o Mark, sign and date your Proxy
Form.
o Detach card from Proxy Form
o Return the card in the
postage-paid envelope provided.
Your telephone or Internet vote
authorizes the named proxies to
vote your shares in the same
manner as if you marked, signed
and returned your Proxy Form.
If you have submitted your
proxy by telephone or the
Internet there is no need for
you to mail back your Proxy
Form.
-------------------------------
800-358-4700 CONTROL NUMBER
CALL TOLL-FREE TO VOTE FOR TELEPHONE/INTERNET VOTING
-------------------------------
\/ DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET \/
- --------------------------------------------------------------------------------
MARSH & MCLENNAN STOCK INVESTMENT PLAN
FOR BERMUDA EMPLOYEES
2002 ANNUAL MEETING OF STOCKHOLDERS OF
MARSH & McLENNAN COMPANIES, INC.
NOTICE TO PARTICIPANTS
As a participant in the Marsh & McLennan Stock Investment Plan for Bermuda
Employees, you have the right to direct The Bank of Butterfield Executor &
Trustee Company Ltd., the Custodian under the Plan, how to vote the shares of
MMC common stock allocated to your account at the 2002 Annual Meeting of
Stockholders of Marsh & McLennan Companies, Inc.
The Annual Meeting will be held on May 16, 2002. Information regarding the
Annual Meeting is set forth in the enclosed Proxy Statement. Also enclosed is
MMC's 2001 Annual Report.
Please specify how your shares are to be voted by completing and signing
the Confidential Voting Instructions on the reverse side hereof and returning
them to the Custodian in the envelope provided. Your instructions to the
Custodian will be kept confidential. Instructions must be received by May 10,
2002 in order for them to be tabulated for voting by the Custodian at the Annual
Meeting.
Very truly yours,
The BANK OF BUTTERFIELD EXECTOR &
TRUSTEE COMPANY LTD. - Custodian
MARSH & MCLENNAN STOCK INVESTMENT PLAN
FOR BERMUDA EMPLOYEES
CONFIDENTIAL VOTING INSTRUCTIONS
2002
The undersigned hereby directs the Custodian to vote all of the shares of
common stock of Marsh & McLennan Companies, Inc. allocated to the undersigned
under the Plan as follows:
IF NO DIRECTION IS MADE, THE CUSTODIAN WILL VOTE THE SHARES FOR ITEMS 1 AND 2.
1. To elect six persons to serve as directors - Nominees:
Jeffrey W. Greenberg, Stephen R. Hardis, The Rt. Hon. Lord Lang of
Monkton, DL, Morton O. Schapiro, Adele Simmons, A.J.C. Smith
(Mark one)
[_] FOR all nominees
[_] FOR all nominees except ______________________
[_] WITHHOLD for all nominees
2. Ratification of Deloitte & Touche LLP as independent auditors for 2002.
[_] FOR [_] AGAINST [_] ABSTAIN
And to vote on such other business as may properly be brought before the
meeting.
Signed........................................
..............................................
Dated..................................., 2002