THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
MARSH & McLENNAN COMPANIES, INC.
U.S. EMPLOYEE
2001 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 2001 Cash Bonus Award Voluntary
Deferral Plan (the "2001 Plan"). Participants in the 2001 Plan may make
deferral elections pursuant to the rules outlined in Section 2 below.
2. PROGRAM RULES
Except as otherwise provided herein, the 2001 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 2001 Plan and make all determinations,
including the determination of bonus awards eligible to be deferred, with
respect to the 2001 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 2001 Plan, and references to the Committee shall be
deemed to include any such delegate. Exercise of deferral elections under
the 2001 Plan must be made in accordance with the following rules.
a. RIGHTS TO AN AWARD AND TO A DEFERRAL ELECTION
(i) 2001 CASH BONUS DEFERRAL. The right of an employee to a
deferral election currently applies to the annual cash
bonus scheduled to be awarded in early 2002 in respect of
2001 services, the payment of which bonus would normally be
made by the end of the first quarter of the 2002 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, sign-on
bonuses, commissions or non-annual incentive payments) that
are not awarded as part of an annual cash bonus plan.
(ii) 2002 CASH BONUS DEFERRAL. The right of an employee to a
deferral election currently applies to the annual cash
bonus scheduled to be awarded in early 2003 in respect of
2002 services, should the employee have a guarantee for the
bonus, the payment of which would normally be made by the
end of the first quarter of the 2003 calendar year. The
deferral of such a bonus will be made pursuant to the U.S.
Employee 2002 Cash Bonus Award Voluntary Deferral Plan (the
"2002 Plan") and is contingent upon approval of the 2002
Plan by the Committee. The terms and conditions for the
2002 Plan are expected to be essentially the same as for
the 2001 Plan.
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b. ELECTION FORMS
In order to ensure that elections to defer bonus amounts
(including such amounts for 2002 cash bonuses with a guarantee)
are effective under applicable tax laws, please complete and sign
the attached election form(s), and return them (postmarked,
delivered or faxed) no later than December 3, 2001. Form(s) should
be returned, and any questions should be directed, to:
Brian A. Kenny
Manager, Compensation Systems and Administration
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, NY 10036-2774
Telephone #: (212) 345-5287
Facsimile #: (212) 345-4767
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) 2001 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 business day following the date on which the bonus
payment would have been made had it not been deferred. The
available accounts for deferrals of bonuses (the "2001
Deferred Bonus Accounts") shall consist of (a) the 2001
Putnam Fund Account and (b) the 2001 Corporation Stock
Account. Amounts may not be transferred between the 2001
Corporation Stock Account and the 2001 Putnam Fund Account.
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d. 2001 PUTNAM FUND ACCOUNT
(i) ACCOUNT VALUATION. The 2001 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 2001 Putnam Fund Account must be made in
multiples of 5% of the total amounts deferred into the 2001
Putnam Fund Account. Deferred amounts will be credited to
the 2001 Putnam Fund Account with units each reflecting one
Class Y 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 the elected fund by
the net asset value of such fund of the 2001 Putnam Fund
Account as of the close of business on the day on which
such bonus payment would have been made had it not been
deferred. All dividends paid with respect to an elected
fund of a 2001 Putnam Fund Account will be deemed to be
immediately reinvested in such fund.
(ii) FUND REALLOCATIONS. Amounts deferred into a 2001 Putnam
Fund Account may be reallocated between eligible funds of
these respective accounts pursuant to an election which may
be made daily. Such election shall be effective, and the
associated reallocation shall be based upon the net asset
values of the applicable funds of the 2001 Putnam Fund
Account, as of the close of business on the business day
the election is received by facsimile or mail, if received
by 2:30 p.m. Eastern Time of that day. If received later
than 2:30 p.m., the election shall be effective as of the
close of business on the following business day.
e. 2001 CORPORATION STOCK ACCOUNT
(i) ACCOUNT VALUATION. The 2001 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 2001 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
2001 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 day on 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 2001 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 2001 Corporation Stock Account must be
deferred to a date not earlier than January 1, 2005. (For
deferrals relating to 2002 bonuses with a guarantee, such
deferrals will be allocated into the 2002 Corporation Stock
Account and must be deferred to a date not earlier than
January 1, 2006.)
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(ii) SUPPLEMENTAL AMOUNT. With respect to that portion of a
bonus award which a participating employee defers into the
2001 Corporation Stock Account, there shall be credited to
such participant's 2001 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 2001 Corporation Stock Account (prior to
giving effect to the supplemental amount) is 50% of such
award.
(iii) STOCK DISTRIBUTIONS. Distributions from the 2001
Corporation Stock Account will be deposited automatically
via book entry for your personal account with the
Corporation's stock transfer agent. If you (or you and your
spouse, as joint tenants) already have such an account with
the stock transfer agent, then the shares will be deposited
into that account. If you do not have such an account, then
one will be established in your name, and the shares will
be deposited in the account.
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 2001 Deferred Bonus Accounts.
g. IRREVOCABILITY AND ACCELERATION
Subject to the provisions of paragraphs h. (iii) and h. (vii)
below, all deferral elections made under the 2001 Plan (and the
2002 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 2001 Deferred Bonus Accounts.
h. 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 2001 Corporation Stock Account or
the 2001 Putnam Fund Account, as the case may be, made in
up to fifteen (15) 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 2001 Corporation Stock Account or the 2001
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.
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(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 2001 Corporation Stock Account or
2001 Putnam Fund Account, as the case may be, made in up to
fifteen (15) 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 2001 Corporation Stock Account or 2001
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.
(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 the 2001 Plan) for awards previously
deferred or redeferred under the 2001 Plan (and the 2002
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 2001 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 total
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 total
disability, as the case may be.
(v) DEATH DURING INSTALLMENT PERIOD. If a participant dies
after the commencement of payments from his or her 2001
Deferred Bonus Accounts, the designated beneficiary shall
receive the remaining installments over the elected
installment period.
(vi) SPECIAL RULES APPLICABLE TO 2001 CORPORATION STOCK ACCOUNT.
Notwithstanding any provision in the 2001 Plan to the
contrary (other than the second sentence of Section 2.i.
above), with respect to a participant's 2001 Corporation
Stock Account, in the event that prior to January 1, 2005,
a participant's employment terminates for total disability
or retirement, all amounts in such account will be paid to
the participant, less applicable withholding taxes, in
January of 2005. In the event that, prior to January 2005,
a participant's employment terminates on account of death,
or a participant whose employment was earlier terminated
for total disability or retirement should die, the
distribution rule in paragraph (iv) above will apply. If,
however, the termination of employment prior to January 1,
2005 is on account of a reason other than death, total
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 2001 Corporation
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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 2001 Corporation Stock Account attributable to the
supplemental amount, the supplemental amount shall be
increased or decreased by the respective gain or loss in
the 2001 Corporation Stock Account attributable to such
supplemental amount.
(vii) ACCELERATION OF DISTRIBUTION. A participant may elect to
accelerate the distribution of all or a portion of the 2001
Deferred Bonus Accounts for any reason prior to the
completion of the elected deferral period, subject to the
imposition of a significant penalty in accordance with
applicable tax rules. The penalty shall be an account
forfeiture equal to (i) 6% of the amount that the
participant elects to have distributed from the 2001
Deferred Bonus Accounts and (ii) 100% of any unvested
supplemental amount as provided in Section 2(e)(ii) above,
including related earnings, that the participant elects to
have distributed from the 2001 Corporation Stock Account.
Amounts distributed to the participant will be subject to
applicable tax withholding, but amounts forfeited will not
be subject to tax.
(viii) CHANGE IN CONTROL. Notwithstanding any other provision in
the 2001 Plan to the contrary, in the event of a "change in
control" of the Corporation, as defined in the
Corporation's 2000 Senior Executive Incentive and Stock
Award Plan (the "2000 Senior Executive Plan") and 2000
Employee Incentive and Stock Award Plan (the "2000 Employee
Plan"), all amounts credited to a participant's 2001
Deferred Bonus Accounts as of the effective date of such
change in control will be distributed within five days of
such change in control as a lump sum cash payment, less
applicable withholding taxes.
(ix) FORM OF PAYMENT. All payments in respect of the 2001 Putnam
Fund Account shall be made in cash and payments in respect
of the 2001 Corporation Stock Account shall be made in
shares of common stock of the Corporation; provided,
however, that in the event of a change in control of the
Corporation, payments from the 2001 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.
i. TAX TREATMENT
Under present Federal income tax laws, no portion of the balance
credited to a participant's 2001 Deferred Bonus Accounts 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
2005. When any part of the 2001 Deferred Bonus Accounts is
actually paid to the participant, such portion will be includable
in income, and Federal, state and local income tax withholding
will
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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.
j. BENEFICIARY DESIGNATION
Each participant shall have the right, at any time, to designate
any person or persons as beneficiary or beneficiaries (both
principal and contingent) to whom payment shall be made under the
2001 Plan and every other Cash Bonus Award Voluntary Deferral Plan
for which the participant has or will have an account balance
(collectively, including the 2001 Plan, "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 for use by a
participant who either does not have such form on file or wishes
to make a change in the beneficiary designation. Upon completion
of the attached form, it should be forwarded to Brian Kenny, 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 participant's estate. The
payment to the designated beneficiary or to the participant's
estate shall completely discharge the Corporation's obligations
under the Plans.
k. 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
2001 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 2001 PLAN
The Committee may, at its discretion and at any time, amend the 2001 Plan
in whole or in part. The Committee may also terminate the 2001 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 15 years
or the elected deferral period), the then remaining balance in such
participant's 2001 Deferred Bonus Accounts.
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4. MISCELLANEOUS
a. A participant under the 2001 Plan is merely a general (not
secured) creditor, and nothing contained in the 2001 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 2001 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 2001 Plan and any elections made pursuant to the 2001 Plan are
subject to approval of the 2001 Plan by the Committee.
b. Participation in the 2001 Plan is subject to these terms and
conditions and to the terms and conditions of (i) the 2000 Senior
Executive Plan with respect to those participants hereunder who
are subject thereto and (ii) the 2000 Employee Plan with respect
to all other participants. Participation in the 2001 Plan shall
constitute an agreement by the participant to all such terms and
conditions and to the administrative regulations of the Committee.
In the event of any inconsistency between these terms and
conditions and the provisions of the 2000 Senior Executive Plan or
the 2000 Employee Plan, as applicable, the provisions of the
latter shall prevail. The 2000 Senior Executive Plan and the 2000
Employee Plan are not subject to any of the provisions of the
Employee Retirement Income Security Act Of 1974.
c. Not more than four million (4,000,000) shares of the Corporation's
common stock, plus such number of shares remaining unused under
pre-existing stock plans approved by the Corporation's
stockholders, may be issued under the 2000 Senior Executive Plan.
d. Not more than forty million (40,000,000) shares of the
Corporation's common stock, plus such number of shares authorized
and reserved for awards pursuant to certain preexisting share
resolutions adopted by the Corporation's Board of Directors, may
be issued under the 2000 Employee Plan.
5. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of the Corporation for its last fiscal
year, the Corporation's Registration Statement on Form 8 dated February
3, 1987, describing Corporation common stock, including any amendment or
reports filed for the purpose of updating such description, and the
Corporation's Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the
common stock, including any further amendment or reports filed for the
purpose of updating such description, which have been filed by the
Corporation under the Securities Exchange Act of 1934, as amended (the
Exchange Act), are incorporated by reference herein.
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All documents subsequently filed by the Corporation pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of
the Corporation's last fiscal year and prior to the filing of a
post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of filing of such documents.
Participants may receive without charge, upon written or oral request, a
copy of any of the documents incorporated herein by reference and any
other documents that constitute part of this Prospectus by contacting Mr.
Brian Kenny, Manager, Compensation Systems and Administration, as
indicated above.
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