Exhibit 10.12
MARSH & McLENNAN COMPANIES, INC
CANADIAN EMPLOYEE
1998 CASH BONUS AWARD VOLUNTARY DEFERRAL PLAN
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1. ELIGIBILITY
All active Canadian employees of Marsh & McLennan Companies, Inc. (the
"Corporation") and its subsidiaries who are designated as eligible for
participation in the MMC Partners Bonus Plan or a Local Bonus Plan, and who are
presently in salary grade 15 (or its equivalent) or above, may, at management's
discretion, be considered for participation in the Marsh & McLennan Companies,
Inc. Canadian Employee 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 in an amount represented by one of the
following two choices:
1. 25%, 50%, 75% or 100% of the employee's cash bonus award, subject
to a maximum limit established by the Committee, or
2. the lowest of 25%, 50%, 75% or 100% of the employee's cash bonus
award which results in a deferral of at least Canadian $10,000.
If the percentage selected times the amount of the cash bonus award is
less than Canadian $10,000, NO deferral will be made or deducted from the
award.
(ii) PERIOD OF DEFERRAL. The payment of a bonus award may be deferred to
January of 2000 or January 2001, as elected by the participant.
(iii) 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 Interest Equivalent Account. Amounts may not be transferred
between the 1998 Interest Equivalent Account and the 1998 Putnam Fund
Account.
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. All amounts credited to the 1998
Putnam Fund Account will be converted into U.S. dollars at the exchange
rate in effect as of the applicable date.
(ii) FUND TRANSFERS. Amounts deferred into a 1998 Putnam Fund Account may
be transferred between eligible funds 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, 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. 1998 INTEREST EQUIVALENT ACCOUNT
An "Interest Equivalent" shall be calculated and added to each 1998
Interest Equivalent Account as of the last day of each calendar quarter
based on the average principal balance in said account during said
calendar quarter and on the average of the 30-day Banker's Acceptance rate
of interest as published in the Toronto Globe & Mail during such calendar
quarter.
f. STATEMENT OF ACCOUNT
The Corporation shall provide periodically to each participant (but not
less frequently than once per calendar quarter) a statement setting forth
the balance to the credit of such participant in such participant's 1998
Deferred Bonus Accounts.
g. IRREVOCABILITY AND ACCELERATION
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.
h. PAYMENT OF DEFERRED AMOUNTS
(i) DEFERRAL YEAR DISTRIBUTIONS. If the participant remains employed until
the deferral year elected, all amounts in the participant's 1998 Deferred
Bonus Accounts will be paid in a single distribution, less applicable
withholding taxes, in January of the deferral year elected.
(ii) TERMINATION OF EMPLOYMENT PRIOR TO END OF DEFERRAL PERIOD. In the
event of termination of employment for any reason prior to the completion
of the elected deferral period, all amounts then in the participant's 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 upon a participant's retirement or termination for disability
prior to completion of the elected deferral period, all such amounts shall
be paid in a single distribution during January of the year following such
retirement or termination for disability, as the case may be.
(iii)CHANGE IN CONTROL. Notwithstanding any other provision in the 1998
Plan to the contrary, in the event of a "change in control" of the
Corporation, as defined in the Corporation's 1997 Employee Incentive and
Stock Award 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 single
distribution, less applicable withholding taxes.
(iv) FORM OF PAYMENT. All payments under the 1998 Plan shall be made in
cash in Canadian dollars converted, if necessary, at the exchange rate in
effect as of the applicable date.
i. TAX TREATMENT
Under present Canadian tax law, all amounts of an employee's bonus deferred
for a period not exceeding three years from the year in which the related
service was rendered, as well as any Interest Equivalent thereon, will be
exempt from Canadian taxation during the period of deferral. When any part
of the 1998 Deferred Bonus Accounts is actually paid to a participant,
taxable employment income will be incurred.
j. BENEFICIARY DESIGNATION
Each participant shall have the right, at any time, to designate any person
or persons as beneficiary or beneficiaries (both principal 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.
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
(provided such period of time falls within the restriction set forth in Section
2.c. (ii) above), the then remaining balance in such participant's 1998 Deferred
Bonus Accounts.
4. MISCELLANEOUS
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.