Exhibit 10.11
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
1998 CASH BONUS AWARD VOLUNTARY DEFERRAL PLAN
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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 1998 Cash Bonus Award Voluntary
Deferral Plan (the "1998 Plan"). Participants in the 1998 Plan may make
deferral elections pursuant to the rules outlined in Section 2 below.
2. PROGRAM RULES
Except as otherwise provided herein, the 1998 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 1998 Plan and make all determinations,
including the determination of bonus awards eligible to be deferred, with
respect to the 1998 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 1998 Plan, and references to the Committee shall be
deemed to include any such delegate. Exercise of deferral elections under
the 1998 Plan must be made in accordance with the following rules.
a. Rights to an Award and to a Deferral Election
The right to a deferral election applies only to the annual cash bonus
scheduled to be awarded in early 1999 in respect of 1998 services, the
payment of which bonus would normally be made by the end of the first
quarter of the 1999 calendar year. The granting of such an annual cash
bonus award is discretionary, and neither delivery of deferral
election materials nor an election to defer shall affect entitlement
to such an award. The right to a deferral election does not apply to
bonuses (including, but not limited to, bonuses pursuant to an
employment agreement, sign-on or guaranteed bonuses, commissions or
non-annual incentive payments) that are not awarded as part of an
annual cash bonus plan.
b. Election Forms
In order to ensure that elections to defer bonus amounts are
effective under applicable tax laws, please complete and sign the
attached election form(s), and return them (postmarked or delivered)
no later than December 4, 1998. Form(s) should be returned, and any
questions should be directed, to:
William Palazzo
Manager, HR Systems and Administration
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, NY 10036-2774
(212) 345-5663
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) 1998 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 "1998
Deferred Bonus Accounts") shall consist of (a) the 1998 Putnam Fund Account and
(b) the 1998 Corporation Stock Account. Amounts may not be transferred between
the 1998 Corporation Stock Account and either the 1998 Putnam Fund Account or
the "Putnam Transfer Fund Account" (as referred to in Section 2.e. below).
d. 1998 Putnam Fund Account
(i) Account Valuation. The 1998 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 1998 Putnam Fund
Account must be made in multiples of 5% of the total amounts
deferred into the 1998 Putnam Fund Account. Deferred amounts will
be credited to the 1998 Putnam Fund Account with units each
reflecting one Class A share of the elected fund. Fractional
units will also be credited to such account, if applicable. The
number of such credited units will be determined by dividing the
value of the bonus award deferred into the elected fund by the
net asset value of such fund of the 1998 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 1998 Putnam Fund Account
will be deemed to be immediately reinvested in such fund.
(ii) Fund Transfers. Amounts deferred into a 1998 Putnam Fund Account and the
Putnam Transfer Fund Account may be transferred between eligible funds of these
respective accounts (but not between the 1998 Putnam Fund Account and the Putnam
Transfer Fund Account) pursuant to an election which may be made daily. Such
election shall be effective, and the associated transfer shall be based upon the
net asset values of the applicable funds of the 1998 Putnam Fund Account or the
Putnam Transfer 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. Putnam Transfer Fund Account
By December 4, 1998, each individual with respect to whom there is
maintained an "Interest Factor Account" (established for deferrals of
all pre-1993 bonus awards), whether or not any such individual is
eligible for participation under Section 1 above, may make an
irrevocable election to transfer all (but not less than all) of such
participant's Interest Factor Account into a "Putnam Transfer Fund
Account", which election shall be effective, and which transfer shall
be based upon the net asset value of the selected funds of such Putnam
Transfer Fund Account, as of the close of business on the last trading
day in 1998.
The Putnam Transfer Fund Account shall be administered in a manner
consistent with the administration of the 1998 Putnam Fund Account
pursuant to Section 2.d.(i) above. Distribution elections (including
the form of payment) otherwise in effect for the Interest Factor
Account shall remain in effect for amounts transferred to the Putnam
Transfer Fund Account.
f. 1998 Corporation Stock Account
(i) Account Valuation. The 1998 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 1998 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 1998 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 1998 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 1998
Corporation Stock Account must be deferred to a date not earlier than January 1,
2002.
(ii) Supplemental Amount. With respect to that portion of a bonus
award which a participating employee defers into the 1998
Corporation Stock Account, there shall be credited to such
participant's 1998 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 1998
Corporation Stock Account (prior to giving effect to the
supplemental amount) is 50% of such award.
(iii) Stock Distributions. Distributions from the 1998 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.
g. Statement of Account
The Corporation shall provide periodically to each participant (but
not less frequently than once per calendar quarter) a statement
setting forth the balance to the credit of such participant in such
participant's 1998 Deferred Bonus Accounts and Putnam Transfer Fund
Account.
h. Irrevocability and Acceleration
Subject to the provisions of paragraphs i. (iii) and i. (vii) below,
all deferral elections made under the 1998 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 1998 Deferred Bonus Accounts.
i. Payment of Deferred Amounts
(i) Year Certain Deferrals. If the participant remains employed until
the deferral year elected, all amounts relating to "year certain"
deferrals will be paid in a single distribution, less applicable
withholding taxes, in January of the deferral year elected, or
the participant may elect (at the time of the original deferral
election) to have distributions from the 1998 Corporation Stock
Account or the 1998 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 1998 Corporation
Stock Account or the 1998 Putnam Fund Account, as the case may
be, by (ii) a fraction, the numerator of which is 1 and the
denominator of which is a number equal to the remaining unpaid
annual installments.
(ii) Retirement Deferrals. For participants who retire, amounts
relating to deferrals until the year following retirement will be
paid in a single distribution in January of the year following
retirement, or the participant may elect (at the time of the
original deferral election) to have distributions from the 1998
Corporation Stock Account or 1998 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 1998 Corporation Stock Account or 1998 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
1998 Plan) for awards previously deferred or redeferred under the
1998 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 1998 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 1998 Deferred Bonus
Accounts, the designated beneficiary shall receive the remaining
installments over the elected installment period.
(vi) Special Rules Applicable to 1998 Corporation Stock Account. Notwithstanding
any provision in the 1998 Plan to the contrary (other than the second sentence
of Section 2.h. above), with respect to a participant's 1998 Corporation Stock
Account, in the event that prior to January 1, 2002, 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
2002. In the event that, prior to January 2002, 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, 2002 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 1998 Corporation Stock Account less (b) the portion of such
balance attributable to the supplemental amount (including earnings thereon),
which portion shall be forfeited in its entirety.
For purposes of determining the portion of the balance of the
1998 Corporation Stock Account attributable to the supplemental
amount, the supplemental amount shall be increased or decreased
by the respective gain or loss in the 1998 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 1998 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 1998 Deferred Bonus Accounts and
(ii) 100% of any unvested supplemental amount as provided in Section 2(f)(ii)
above, including related earnings, that the participant elects to have
distributed from the 1998 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
1998 Plan to the contrary, in the event of a "change in control"
of the Corporation, as defined in the Corporation's 1997 Senior
Executive Incentive and Stock Award Plan (the "1997 Senior
Executive Plan") and 1997 Employee Incentive and Stock Award Plan
(the "1997 Employee Plan"), all amounts credited to a
participant's 1998 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 1998 Putnam Fund
Account shall be made in cash and payments in respect of the 1998
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 1998
Corporation Stock Account shall be made in cash based upon (A)
the highest price paid for shares of common stock of the
Corporation in connection with such change in control or (B) if
shares of common stock of the Corporation are not purchased or
exchanged in connection with such change in control, the closing
price of the common stock of the Corporation on the New York
Stock Exchange on the last trading day on the New York Stock
Exchange prior to the date of the change in control.
j. Tax Treatment
Under present Federal income tax laws, no portion of the balance
credited to a participant's 1998 Deferred Bonus Accounts or Putnam
Transfer Fund Account will be includable in income for Federal income
tax purposes during the period of deferral. However, FICA tax
withholding is required currently on the cash bonus amount (excluding
any portion subject to a mandatory deferral) awarded to the
participant, and such withholding is required on the supplemental
amount in January of 2002. When any part of the 1998 Deferred Bonus
Accounts or Putnam Transfer Fund Account is actually paid to the
participant, such portion will be includable in income, and Federal,
state and local income tax withholding will apply. The Corporation may
make necessary arrangements in order to effectuate any such
withholding, including the mandatory withholding of shares of common
stock of the Corporation which would otherwise be distributed to a
participant.
k. Beneficiary Designation
Each participant shall have the right, at any time, to designate any
person or persons as beneficiary or beneficiaries (both principal and
contingent) to whom payment shall be made under the 1998 Plan and
every other Cash Bonus Award Voluntary Deferral Plan for which the
participant has or will have an account balance (collectively,
including the 1998 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 William
Palazzo, 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.
l. Changes in Capitalization
If there is any change in the number or class of shares of common
stock of the Corporation through the declaration of stock dividend or
other extraordinary dividends, or recapitalization resulting in stock
splits, or combinations or exchanges of such shares or in the event of
similar corporate transactions, each participant's 1998 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 1998 PLAN
The Committee may, at its discretion and at any time, amend the 1998 Plan
in whole or in part. The Committee may also terminate the 1998 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
1998 Deferred Bonus Accounts.
4. MISCELLANEOUS
a. A participant under the 1998 Plan is merely a general (not secured)
creditor, and nothing contained in the 1998 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 1998 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 1998 Plan and any elections made
pursuant to the 1998 Plan are subject to approval of the 1998 Plan by
the Committee.
b. Participation in the 1998 Plan is subject to these terms and
conditions and to the terms and conditions of (i) the 1997 Senior
Executive Plan with respect to those participants hereunder who are
subject thereto and (ii) the 1997 Employee Plan with respect to all
other participants. Participation in the 1998 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 1997 Senior Executive Plan or the 1997
Employee Plan, as applicable, the provisions of the latter shall
prevail. The 1997 Senior Executive Plan and the 1997 Employee Plan are
not subject to any of the provisions of the Employee Retirement Income
Security Act Of 1974.
c. Not more than seven million, five hundred thousand (7,500,000) 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 1997 Senior
Executive Plan.
d. Not more than eighteen million (18,000,000) 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 1997 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 dated October 10, 1997,
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.
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.
William Palazzo, Manager, HR Systems and Administration as indicated
above.