MARSH & MCLENNAN COMPANIES, INC.
DIRECTORS STOCK COMPENSATION PLAN
(Restated as Amended 11/21/96)
1. Purpose.
The Marsh & McLennan Companies, Inc. Directors Stock
Compensation Plan (the "Plan") is intended to provide an incentive to members of
the board of directors of Marsh & McLennan Companies, Inc., a Delaware
corporation (the "Company"), who receive fees for their services, to remain in
the service of the Company and to encourage such Directors to acquire additional
stock ownership interests in the Company.
2. Definitions.
(a) "Accounting Date" means June 1st of each Plan Year.
(b) "Basic Fee" means the annual retainer payable to a
Director during each Plan Year (at the annual rate in effect on the Accounting
Date of such Plan Year) for such Director's services on the Board (exclusive of
any amounts payable with respect to service on a committee of the Board or other
committee of Directors or for attendance at Board or committee meetings).
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means the Compensation Committee of the Board.
(e) "Common Stock" means the common stock, par value $1.00 per
share, of the Company.
(f) "Compensation" means the aggregate amount payable to a
Director for such Director's services on the Board (including any amounts
payable with respect to service on a committee of the Board or other committee
of Directors or for attendance at Board or committee meetings, but excluding the
portion of the Basic Fee with respect to which shares of Common Stock are
issuable pursuant to Section 5(a) hereof).
(g) "Director" means a member of the Board who receives fees
for his or her services.
(h) "Effective Date" means June 1, 1995.
(i) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(j) "Fair Market Value" on any given date means, except as
otherwise provided in Section 5(f) hereof, the average of the high and low
prices of the Common Stock on the New York Stock Exchange on the last trading
day preceding such date.
(k) "Plan Year" means the twelve-month period commencing June
1st and ending on the following May 31st.
3. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee
shall adopt such rules as it may deem appropriate in order to carry out the
purpose of the Plan. All questions of interpretation, administration, and
application of the Plan shall be determined by a majority of the members of the
Committee, except that the Committee may authorize any one or more of its
members, or any officer of the Company, to execute and deliver documents on
behalf of the Committee. The determination of such majority shall be final and
binding in all matters relating to the Plan. No member of the Committee shall be
liable for any act done or omitted to be done by such member or by any other
member of the Committee in connection with the Plan, except for such member's
own willful misconduct or as expressly provided by statute.
4. Common Stock Reserved for the Plan.
The number of shares of Common Stock authorized for issuance
under the Plan is 250,000, including Deferred Shares (as defined in Section 5(c)
hereof), whether distributed as such or paid in cash, subject to adjustment
pursuant to Section 6 hereof. Shares of Common Stock delivered hereunder may be
either authorized but unissued shares or previously issued shares reacquired and
held by the Company.
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5. Terms and Conditions of Grants.
(a) Mandatory Portion. On each Accounting Date commencing with
the Effective Date, each Director shall automatically receive a number of shares
of Common Stock with a Fair Market Value on such Accounting Date equal to
one-quarter (1/4) of his or her Basic Fee payable during the Plan Year which
commences on such Accounting Date. Such shares of Common Stock(including
fractional shares) shall be received in lieu of the payment of cash in respect
of one-quarter (1/4) of such Basic Fee and shall be transferred on such
Accounting Date in accordance with Section 5(e) hereof, except to the extent
that a Deferral Election (as defined in Section 5(c) hereof) shall be in effect
with respect to such shares or to the extent that Section 5(f) hereof applies.
(b) Elective Portion. Each Director may elect that a specified
percentage (in increments of 10%) of his or her future Compensation be paid in
shares of Common Stock. Such shares of Common Stock (including fractional
shares) shall be received in lieu of the payment of cash in respect of the
specified percentage of future Compensation payable for services rendered in the
quarters ended August 15th, November 15th, February 15th and May 15th, as the
case may be. Such shares of Common Stock shall be transferred in accordance with
Section 5(e) hereof, except to the extent that a Deferral Election (as defined
in Section 5(c) hereof) shall be in effect with respect to such shares or to the
extent that Section 5(f) hereof applies. An election hereunder shall be in the
form of a document executed and filed with the Secretary of the Company and
shall remain in effect until the effectiveness of any modification or
revocation.
(c) Deferral Election. With respect to (1) the portion of the
Basic Fee payable in Common Stock under Section 5(a) and (2) the specified
percentage of Compensation payable in Common Stock under Section 5(b) hereof,
each Director may elect to defer the receipt (a "Deferral Election") of all or
any portion of the shares of Common Stock otherwise transferable pursuant to
Section 5(e). In such event, there shall be credited to an account maintained on
behalf of such Director, as of the date on which shares would otherwise be
transferred hereunder, a number of Shares ("Deferred Shares") equal to the
number of shares otherwise transferable. A Deferral Election or revocation
hereunder shall be in the form of a document executed by the Director and filed
with the Secretary of the Company prior to the
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time that the Basic Fee or other Compensation to which such election relates has
been earned. Any such election may be modified or revoked at any time with
respect to the Basic Fee or other Compensation not yet earned, but will remain
in effect until modified or revoked.
Effective as of the Effective Date, all units representing
phantom stock which have been credited to an account maintained by the Company
for the benefit of a Director, pursuant to a deferral agreement or arrangement
with such Director, shall be converted into an equal number of Deferred Shares
pursuant to this Plan and shall thereafter be treated in accordance with the
terms hereof.
The Director shall elect (a) that Deferred Shares be
distributed (in whole shares of Common Stock and cash in lieu of any fractional
shares) in a lump sum or in substantially equal annual installments (not
exceeding 10), and (b) that the lump sum or first installment be distributed on
the tenth day of the calendar year immediately following either (i) the year in
which the Director ceases to be a Director of the Company or (ii) the earlier of
the year in which the Director ceases to be a Director of the Company or a date
designated by the Director; provided, however, that any such election shall be
subject to Section 5(f) hereof. Installments subsequent to the first installment
shall be distributed on the tenth day of each succeeding calendar year until all
of the Director's Deferred Shares shall have been distributed. Notwithstanding
anything else this Plan, the Committee may, in its sole discretion, accelerate
the distribution of Deferred Shares in cases of extreme emergency or hardship.
In the event the Director should die before all of the
Director's Deferred Shares have been distributed, the balance of the Deferred
Shares shall be distributed in a lump sum to the beneficiary or beneficiaries
designated in writing by the Director, or if no designation has been made, to
the estate of the Director.
(d) Dividend Equivalents. Deferred Shares shall be credited
with an amount equal to the dividends which would have been paid on an equal
number of outstanding shares of Common Stock ("Dividend Equivalents"). Dividend
Equivalents shall be credited (i) as of the payment date of such dividends, and
(ii) only with respect to Deferred Shares credited to such Director
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prior to the record date of the dividend. Deferred Shares held pending
distribution shall continue to be credited with Dividend Equivalents.
Dividend Equivalents so credited shall be converted into an
additional number of Deferred Shares as of the payment date of the dividend
(based on the Fair Market Value on such payment date). Such Deferred Shares
shall thereafter be treated in the same manner as any other Deferred Shares
under the Plan.
(e) Transfer of Shares. Shares of Common Stock issuable to a
Director under Section 5(a) hereof shall be transferred to such Director as of
each Accounting Date. The total number of shares of Common Stock to be so
transferred shall be determined by dividing (a) one-quarter (1/4) of such
Director's Basic Fee payable during the Plan Year commencing on such Accounting
Date by (b) the Fair Market Value of a share of Common Stock on such Accounting
Date. Shares of Common Stock issuable to a Director under Section 5(b) hereof
shall be transferred to such Director on August 31st, November 30th, February
28th and May 31st of each Plan Year. The total number of shares of Common Stock
to be so transferred on each such date shall be determined by dividing (x) the
product of (1) the percentage specified by the Director pursuant to Section 5(b)
hereof and (2) the Director's Compensation payable for services rendered in the
quarter ending on August 15th, November 15th, February 15th or May 15th of such
Plan Year, as the case may be, by (y) the Fair Market Value of a share of Common
Stock on such date. The registrar for the Company will make an entry on its
books and records evidencing that such shares (including any fractional shares)
have been duly issued as of such dates; provided, however, that a Director may
in the alternative elect in writing prior thereto to receive a stock certificate
representing the number of whole such shares acquired plus cash in lieu of any
fractional shares.
(f) Change in Control. Upon a Change in Control, all Deferred
Shares, to the extent credited prior to the Change n Control, shall be paid
immediately in cash. For purposes of this Section 5(f), with respect to
determining the cash equivalent value of a Deferred Share, the Fair Market Value
of such a Deferred Share shall be deemed to equal the greater of (i) the highest
Fair Market Value per share at any time during the 60-day period preceding a
Change in Control and (ii) the price of a
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share of Common Stock which is paid or offered to be paid, by any person or
entity, in connection with any transaction which constitutes a Change in Control
pursuant to this Section 5(f).
For purposes of the Plan, a "Change in Control" shall have
occurred if:
(i) any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company,
any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of Common Stock of the
Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
50% or more of the combined voting power of the
Company's then outstanding voting securities;
(ii) during any period of two consecutive years,
individuals who at the beginning of such period
institute the Board, and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this Section
5(f)) whose election by the Board or nomination for
election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the
beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(iii) the stockholders of the Company approve a merger
or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation
which would result in the voting securities of the
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Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of
the voting securities of the Company or such surviving
entity (or any parent of the Company or such surviving
entity) outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected
to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as herein
above defined) acquired more than 50% of the combined
voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets (or any
transaction having a similar effect).
6. Effect of Certain Changes in Capitalization.
In the event of any recapitalization, stock split, reverse
stock split, stock dividend, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event affecting the Common Stock, the maximum number or class of
shares available under the Plan, and the number or class of shares of Common
Stock to be delivered hereunder shall be adjusted by the Committee to reflect
any such change in the number or class of issued shares of Common Stock.
7. Term of Plan.
This Plan shall become effective as of the Effective Date,
provided that the Plan shall have been approved by the stockholders of the
Company at the 1995 annual meeting of stockholders. This Plan shall remain in
effect until all authorized shares have been issued, unless sooner terminated by
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the Board. No transfer of shares of Common Stock may be made to any Director
under the Plan unless stockholder approval of the Plan has previously been
obtained pursuant to this Section 7.
8. Amendment; Termination.
The Board may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part.
9. Rights of Directors.
Nothing contained in the Plan or with respect to any grant
shall interfere with or limit in any way the right of the stockholders of the
Company to remove any Director from the Board, nor confer upon any Director any
right to continue in the service of the Company as a Director.
10. General Restrictions.
(a) Investment Representations. The Company may require any
Director to whom Common Stock is issued, as a condition of receiving such Common
Stock, to give written assurances in substance and form satisfactory to the
Company and its counsel to the effect that such person is acquiring the Common
Stock for his own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with Federal and
applicable state securities laws.
(b) Compliance with Securities Laws. Each issuance shall be
subject to the requirement that, if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares upon any
securities exchange or under any state or Federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance of shares hereunder, such issuance may not
be accepted or exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Committee. Nothing herein shall be deemed to
require the Company to apply for or to obtain such listing, registration or
qualification.
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(c) Nontransferability. Awards under this Plan shall not be
transferable by a Director other than by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
11. Withholding.
The Company may defer making payments under the Plan until
satisfactory arrangements have been made for the payment of any Federal, state
or local income taxes required to be withheld with respect to such payment or
delivery.
12. Governing Law.
This Plan and all rights hereunder shall be construed in
accordance with and governed by the laws of the State of Delaware.
13. Headings.
The headings of sections and subsections herein are included
solely for convenience of reference and shall not affect the meaning of any of
the provisions of the Plan.
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