-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RpNaBiXl3qLeJ45MXHBinGVZGf7Yw3J33ChAvYcpkMRXtvkwGj9TQ0ZewGCVn+z+ H1rNCDm8ab0dSDTzRWNn2Q== 0001047469-99-010456.txt : 19990322 0001047469-99-010456.hdr.sgml : 19990322 ACCESSION NUMBER: 0001047469-99-010456 CONFORMED SUBMISSION TYPE: PRER14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARSH & MCLENNAN COMPANIES INC CENTRAL INDEX KEY: 0000062709 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 362668272 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRER14A SEC ACT: SEC FILE NUMBER: 001-05998 FILM NUMBER: 99568557 BUSINESS ADDRESS: STREET 1: 1166 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2123455000 MAIL ADDRESS: STREET 1: 1166 AVE OF THE AMERICAS STREET 2: 27TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: MARLENNAN CORP DATE OF NAME CHANGE: 19760505 PRER14A 1 PRER14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: /X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12 MARSH AND McLENNAN COMPANIES, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ----------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ----------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ----------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ----------------------------------------------------------------------- (5) Total fee paid: ----------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ----------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ----------------------------------------------------------------------- (3) Filing Party: ----------------------------------------------------------------------- (4) Date Filed: ----------------------------------------------------------------------- [LOGO] 1999 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT [LOGO] Dear Marsh & McLennan Stockholder: You are cordially invited to attend the 1999 Annual Meeting of Stockholders of Marsh & McLennan Companies, Inc., which will be held at 10:00 a.m. on Thursday, May 20, 1999 in the auditorium on the second floor at 1221 Avenue of the Americas, New York, New York. The major items of business, as outlined in the following Notice of Annual Meeting of Stockholders and Proxy Statement, will be the election of seven persons to serve as Class II directors, an amendment to the Restated Certificate of Incorporation to increase the number of authorized shares of common stock, the approval of the 1999 Employee Stock Purchase Plan and the ratification of the appointment of Deloitte & Touche LLP as independent public accountants for 1999. 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, date, sign and return the enclosed proxy card promptly. We look forward to seeing you at the meeting. Very truly yours, /s/ A.J.C. SMITH Chairman of the Board March 31, 1999 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT OF MARSH & MCLENNAN COMPANIES, INC. 1166 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10036-2774 The Annual Meeting of Stockholders of Marsh & McLennan Companies, Inc., a Delaware corporation ("MMC"), will be held on Thursday, May 20, 1999 at 10:00 a.m. (local time) in the second floor auditorium at 1221 Avenue of the Americas, New York, New York for the following purposes: (1) To elect seven persons to serve as Class II directors; (2) To adopt an amendment to MMC's Restated Certificate of Incorporation increasing the number of authorized shares of common stock; (3) To approve the Marsh & McLennan Companies 1999 Employee Stock Purchase Plan; (4) To ratify the appointment of Deloitte & Touche LLP as independent public accountants for MMC for its fiscal year ending December 31, 1999; and (5) To transact such other business as may properly be brought before the meeting. Only stockholders of record at the close of business on March 24, 1999 are entitled to vote at the Annual Meeting or any adjournment thereof. As of that date, [ ] shares of common stock were outstanding and entitled to one vote each on all matters submitted to stockholders. A list of stockholders will be available for inspection for at least ten days prior to the Annual Meeting at the principal executive offices of MMC at 1166 Avenue of the Americas, New York, New York. This proxy solicitation material is being mailed on or about March 31, 1999 to stockholders as of the record date with a copy of MMC's 1998 Annual Report to Stockholders, which includes financial statements for the period ended December 31, 1998. The matters to be acted upon are described in this Notice of Annual Meeting of Stockholders and Proxy Statement. Proxies will be voted at the Annual Meeting, or at any adjournment thereof, at which a quorum is present, in accordance with the directions on the proxy card. The holders of a majority of MMC's common stock outstanding and entitled to vote who are present either in person or represented by proxy constitute a quorum for the Annual Meeting. Unless otherwise directed in the proxy, the persons named therein will vote FOR the election of the director nominees listed below, FOR the adoption of the amendment to the Restated Certificate of Incorporation increasing the number of authorized shares of common stock, FOR the approval of the 1999 Employee Stock Purchase Plan and FOR the ratification of the appointment of Deloitte & Touche LLP as MMC's independent public accountants for its fiscal year ending December 31, 1999. 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 Annual Meeting. Consequently, any shares not voted FOR a particular director (whether as a result of a direction to withhold or a broker nonvote) will not be counted in such director's favor. 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. Adoption of the proposal to amend the Restated Certificate of Incorporation requires the affirmative vote of a majority of the outstanding shares of MMC's common stock. Accordingly, abstentions and broker nonvotes will have the effect of a negative vote on the proposal. All other matters to be acted on at the Annual Meeting require the affirmative vote of a majority of the shares present and entitled to vote at the meeting to constitute the action of the stockholders. In accordance with Delaware law, abstentions will, while broker nonvotes will not, be treated as present and entitled to vote for purposes of the preceding sentence. As of the date hereof, the Board of Directors knows of no other business that will be presented for consideration at the Annual Meeting. If other business shall properly come before the Annual Meeting, including any proposal submitted by a stockholder which was omitted from this Proxy Statement in accordance with applicable provisions of the federal securities laws, the persons named in the proxy will vote according to their best judgment. DIRECTORS The Board of Directors is divided into three classes. The regular terms of office for the Class II, Class III and Class I directors expire at the 1999, 2000 and 2001 annual meetings of stockholders, respectively. Seven persons are to be elected at the Annual 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 Annual Meeting as their respective terms will continue. Each director has served as a director of MMC since the year indicated. Mr. Richard H. Blum, a Class I director, retired from the Board in January 1999. Mr. George Putnam, a Class I director, is retiring from the Board at the Annual Meeting. It is intended that shares represented by the proxies will be voted for the election of all of the Class II nominees listed below. In the unexpected event that any nominee should become unavailable to serve as a director prior to the Annual Meeting for any reason, the persons designated as proxies reserve full discretion to cast their votes for another person whom the Board of Directors of MMC might designate in substitution. 2 NOMINEES FOR CLASS II DIRECTORS (TERMS EXPIRING IN 2002) JEFFREY W. GREENBERG DIRECTOR SINCE 1996 [PICTURE] Mr. Greenberg, age 47, became President of MMC in January, 1999 and has been the Chairman of Marsh & McLennan Capital, Inc., a subsidiary of MMC, since 1996. From 1978 to 1995, he was employed by American International Group, Inc., including serving from 1991 as executive vice president with responsibility for its domestic brokerage group. Mr. Greenberg is a director of ACE Limited and a trustee of Brown University, the Spence School in New York City and New York Presbyterian Hospital. STEPHEN R. HARDIS** DIRECTOR SINCE 1998 [PICTURE] Mr. Hardis, age 63, is Chairman and Chief Executive Officer of Eaton Corporation which he joined in 1979. Mr. Hardis is a director of KeyCorp, Lexmark International Corporation, Nordson Corporation, and Progressive Corporation and a trustee of the Cleveland Clinic. THE RT. HON. LORD LANG OF MONKTON** DIRECTOR SINCE 1997 [PICTURE] Lord Lang, age 58, 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. Lord Lang was appointed to the Queen's Privy Council in 1990. He is deputy chairman of European Telecom plc, chairman of Murray Ventures Investment Trust plc and a non-executive director of Lithgows Ltd., CGU plc and Second Scottish National Trust plc.
3 JOHN D. ONG** DIRECTOR SINCE 1998 [PICTURE] Mr. Ong, age 65, is Chairman Emeritus of the BFGoodrich Company. He retired as Chairman of The BFGoodrich Company in July, 1997, after more than 36 years of service, including as Chairman and Chief Executive Officer from July, 1979 until December, 1996. He is also a director of Ameritech Corporation, ASARCO Inc., Cooper Industries, The Geon Company and TRW Inc. Mr. Ong is a trustee of the University of Chicago and the John S. and James L. Knight Foundation and is Chairman of the Board of the Musical Arts Association (Cleveland Orchestra). He is a former Chairman of The Business Roundtable. SAXON RILEY DIRECTOR SINCE 1998 [PICTURE] Mr. Riley, age 60, served as Chairman of Sedgwick Group plc since March 1997 and as its Chief Executive from 1992 until 1997. Sedgwick was acquired by MMC in 1998. Mr. Riley became Chairman of Sedgwick Brokering Service Limited on its formation in 1989. In 1990 he was appointed a Vice-Chairman of Sedgwick and in January 1992 Group Managing Director with responsibility for the group's insurance, reinsurance broking, and risk services activities worldwide. ADELE SMITH SIMMONS* ** DIRECTOR SINCE 1978 [PICTURE] Mrs. Simmons, age 57, has been President of the John D. and Catherine T. MacArthur Foundation since 1989. She is a director of the Synergos Institute and the Union of Concerned Scientists and a member of the Council on Foreign Relations.
4 A. J. C. SMITH* DIRECTOR SINCE 1977 [PICTURE] Mr. Smith, age 64, has been Chairman of the Board and Chief Executive Officer of MMC since 1992. He served as President from 1986 to 1992. He joined William M. Mercer Limited, a Canadian subsidiary of MMC, in 1961. Mr. Smith is a trustee of the various mutual funds managed by Putnam Investment Management, Inc., a subsidiary of MMC. He is also Vice Chairman of the Central Park Conservancy, a member of the Board of Trustees of The Carnegie Hall Society, Inc. and the Educational Broadcasting Corporation in New York City and 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 2000) PETER COSTER DIRECTOR SINCE 1988 [PICTURE] Mr. Coster, age 59, is President of Mercer Consulting Group, Inc., a subsidiary of MMC. He joined Mercer in 1984 upon its acquisition of a U.K. benefits consulting firm that Mr. Coster had joined in 1962. GWENDOLYN S. KING** DIRECTOR SINCE 1998 [PICTURE] Ms. King, age 57, was senior vice president, Corporate and Public Affairs at Peco Energy from 1992 until her retirement in February, 1998. From 1989 to 1992, she served as commissioner of the Social Security Administration in the U.S. Department of Health and Human Services. Ms. King is a director of Lockheed Martin Corporation, Monsanto Company, Fox Chase Cancer Center and the National Adoption Center.
5 LAWRENCE J. LASSER DIRECTOR SINCE 1987 [PICTURE] Mr. Lasser, age 56, is President and Chief Executive Officer of Putnam Investments, Inc., a subsidiary of MMC. He joined Putnam in 1969. Mr. Lasser is a trustee of the various mutual funds managed by Putnam Investment Management, Inc., a subsidiary of MMC. He is a member of the Board of Governors and Executive Committee of the Investment Company Institute, a member of the Board of Trustees of the Museum of Fine Arts (Boston), a Trustee of Beth Israel/Deaconess Medical Center in Boston, a Trustee of the Vineyard Open Land Foundation, a member of the Council on Foreign Relations, and a member of the Board of Directors of the United Way of Massachusetts Bay. DAVID A. OLSEN DIRECTOR SINCE 1997 [PICTURE] Mr. Olsen, age 61, served as Vice Chairman of MMC from May 1997 until December 1997. Prior to MMC's business combination with Johnson & Higgins, he was Chairman and Chief Executive Officer of Johnson & Higgins, which he joined in 1966. Mr. Olsen is a member of the Board of Trustees of Bowdoin College, and an honorary director of the New York City Partnership. He is also a member of the boards of U.S. Trust Corporation, Sharon (Connecticut) Hospital and India House, and he serves as Co-Chairman of New York's South Street Seaport Museum and Co-Chairman of its Development and Executive Committees. JOHN T. SINNOTT DIRECTOR SINCE 1992 [PICTURE] Mr. Sinnott, age 59, 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 most recently 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. Mr. Sinnott is a trustee of the Insurance Institute of America.
6 FRANK J. TASCO* ** DIRECTOR SINCE 1979 [PICTURE] Mr. Tasco, age 71, retired in 1992 as Chairman of the Board and Chief Executive Officer of MMC, a position he had held since 1986. From December 1993 to December 1994, he served as Chairman of Borden, Inc. Mr. Tasco is Chairman of Angram, Inc. and a director of Travelers Property & Casualty Corp. W.R.P. WHITE-COOPER DIRECTOR SINCE 1998 [PICTURE] Mr. White-Cooper, age 55, became Chairman and Chief Executive of operations encompassing Europe, the Middle East, Africa, Asia-Pacific and Japanese Practices for Marsh Inc. in 1999. He previously served as the Chief Executive of Sedgwick Group, plc since March 1997. Sedgwick was acquired by MMC in 1998. Since his transfer to the UK from South Africa in 1982, Mr. White-Cooper held various executive positions involving Sedgwick's UK retail and consulting business, Sedgwick's operations in Europe and Asia Pacific and more recently Sedgwick Noble Lowndes, the worldwide employee benefits and healthcare consulting business of Sedgwick. Mr. White-Cooper is a Fellow of the Chartered Insurance Institute, a past president of the Insurance Institute of London and a member of its Council.
CONTINUING CLASS I DIRECTORS (TERMS EXPIRING IN 2001) NORMAN BARHAM DIRECTOR SINCE 1997 [PICTURE] Mr. Barham, age 57, became Vice Chairman of Marsh Inc., a subsidiary of MMC, in 1999. He previously served as Vice Chairman of J&H Marsh & McLennan, Inc. following MMC's business combination with Johnson & Higgins in 1997. Mr. Barham joined Johnson & Higgins in 1975 and was selected to lead the Johnson & Higgins Global Business Group in 1992. He was elected an Executive Vice President of Johnson & Higgins in 1995 and President in 1996. Mr. Barham is a trustee of The College of Insurance and Queens College, as well as a member of the board of New York City Outward Bound.
7 LEWIS W. BERNARD* *** DIRECTOR SINCE 1992 [PICTURE] Mr. Bernard, age 57, 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 a trustee or director of the American Museum of Natural History, The Commonwealth Fund, the Harvard Management Company, the John and Mary R. Markle Foundation and the J. Paul Getty Trust. FRANK J. BORELLI DIRECTOR SINCE 1988 [PICTURE] Mr. Borelli, age 63, has been Senior Vice President and Chief Financial Officer of MMC since 1984. He is a director of The Interpublic Group of Companies, Inc. and United Water Resources, Inc. Mr. Borelli is a past national chairman and a director of the Financial Executives Institute. He is also Vice Chairman of the New York City Chapter of the National Multiple Sclerosis Society, the Nyack Hospital and the Private Sector Council and a director of the New York City Public/Private Initiatives, Inc. ROBERT F. ERBURU*** DIRECTOR SINCE 1996 [PICTURE] Mr. Erburu, age 68, 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. Mr. Erburu is a director of Cox Communications, Inc., the Skirball Institute of American Values and a member of the Board of Councilors of the College of Letters, Arts and Science of the University of Southern California. He is Chairman of the Board of Trustees of The Huntington Library, Art Collections and Botanical Gardens, the J. Paul Getty Trust and the Pacific Council on International Policy, as well as a trustee of the National Gallery of Art, The Flora and William Hewlett Foundation and the Ahmanson Foundation. Mr. Erburu is also a member of the Business Council.
8 RAY J. GROVES* *** DIRECTOR SINCE 1994 [PICTURE] Mr. Groves, age 63, is Chairman of Legg Mason Merchant Banking, Inc. He 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 Allegheny Teledyne Incorporated, American Water Works Company, Inc., Consolidated Natural Gas Company, Electronic Data Systems Corporation, LAI Worldwide, Inc. and RJR Nabisco, Inc. Mr. Groves is a member of the Board of Trustees of the New York Public Policy Institute. He is also a managing director, treasurer and secretary of the Metropolitan Opera Association and Vice Chairman of The Ohio State University Foundation.
- ------------------------ * Member of the Executive Committee, of which Mr. Smith is Chairman. ** Member of the Audit Committee, of which The Rt. Hon. Lord Lang of Monkton is Chairman. *** Member of the Compensation Committee, of which Mr. Bernard is Chairman. BOARD COMMITTEES AND MEETINGS The Executive Committee has all the powers of the Board of Directors, 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 of Directors and under applicable law. The Executive Committee held one meeting during 1998. The Audit Committee submits recommendations to the Board of Directors with respect to the selection of MMC's independent public accountants and on any other matters it deems appropriate. It reviews the annual financial statements of MMC with MMC's independent public accountants, the practices and procedures adopted by MMC in the preparation of such statements, and the independent public accountants' annual scope of audit. The Audit Committee is required to meet at least annually with such accountants and at any time when considered appropriate by the Audit Committee or such accountants. The Audit Committee held six meetings during 1998. 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 oversees general compensation policies and practices and administers MMC's stock-based award plans. Pursuant to MMC's by-laws, no member of the Compensation Committee may be an employee of MMC or be eligible to receive grants under any plan that the Compensation Committee administers other than grants that are part of the usual compensation of directors. The Compensation Committee held five meetings during 1998. 9 The Board of Directors conducted seven meetings during 1998. The average attendance by directors at the meetings of the Board of Directors and committees thereof was 92.4% and all directors attended at least 75% of the meetings of the Board of Directors and committees on which they served. DIRECTORS' COMPENSATION As compensation for their services, Messrs. Bernard, Erburu, Groves, Hardis, Lang, Olsen, Ong, Putnam and Tasco, and Ms. King and Mrs. Simmons, each receive a basic retainer of $40,000 per year and an annual grant of 900 shares of MMC 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 of Directors or a committee thereof they attend. The chairman of each committee (other than Mr. Smith 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 of MMC or its subsidiaries 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 MMC 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 MMC 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 date of retirement from the Board or a specified earlier date. EMPLOYMENT AGREEMENTS Marsh & McLennan Capital, Inc. ("MMCAP"), a wholly-owned subsidiary of MMC, has an employment agreement with Mr. Jeffrey W. Greenberg, its Chairman (the "Greenberg Agreement"). MMC has certain obligations and has guaranteed MMCAP's obligations under this agreement. On January 21, 1999, Mr. Greenberg was elected President of MMC, and it was announced that he will succeed Mr. Smith as Chief Executive Officer by the end of 1999. The Greenberg Agreement is to be terminated as of January 21, 1999, as described below. Under the Greenberg Agreement, which expires by its terms in the year 2000, Mr. Greenberg receives an annual salary of at least $750,000 per year and is eligible to participate in MMC's Senior Management Incentive Compensation Plan. He also is entitled to receive annual awards of restricted stock or restricted stock units of MMC with an aggregate value equal to 65% of his salary and options to acquire additional shares of MMC stock. If his employment is terminated (other than for cause or disability) or if he terminates his employment for "Good Reason", as described in the Greenberg Agreement, Mr. Greenberg will be entitled to receive for a period of two years after the termination 10 of employment his base salary, bonuses (at the annual rate of not less than $750,000), and continuation of benefits during such period; his unvested stock awards will vest and the Trident Performance Payment will remain payable. He would also be entitled to enhanced compensation in respect of excise tax in the event of certain terminations of employment upon a change in control of MMC (as described in footnote 2 to the "Summary Compensation Table" below) or of MMCAP. In addition, Mr. Greenberg may receive certain contingent performance payments based on the extent of MMC's investment return and fees from originating, structuring and managing certain insurance and related industry investments, including MMC's investment in the Trident Partnership, L.P. and its anticipated investment in a successor Trident Partnership. As of December 31, 1998, Mr. Greenberg's estimated interest in such contingent payments aggregated approximately $3.0 million, subject to realization of such returns and fees and possible future adjustments. The Greenberg Agreement is to be terminated as of January 21, 1999, as will be the accrual to Mr. Greenberg of additional rights to contingent performance payments other than in respect of MMC's investment in the Trident Partnerships. Mr. Greenberg will retain rights described in this and the preceding paragraph in the event of certain terminations of his employment upon a change in control of MMC prior to his succeeding Mr. Smith as Chief Executive Officer of MMC. Putnam Investments, Inc. ("Putnam"), a subsidiary of MMC, has an employment agreement with Mr. Lawrence J. Lasser, its President and Chief Executive Officer (the "Lasser Agreement") dated December 31, 1997 and which expires on December 31, 2001. 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 year 2000 annual meeting. 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, a portion of which may be paid in the form of restricted stock units of Putnam ("Putnam restricted stock units") relating to Class B Common Stock of Putnam ("Class B Shares"). Mr. Lasser is also entitled to awards of Putnam restricted stock units and options ("Putnam options") to acquire Class B Shares of Putnam in the first quarters of 1999 and 2000 in amounts to be determined by the Compensation Committee. In addition, Mr. Lasser will receive, on or after November 1, 2002, a special retirement benefit in consideration for a non-competition covenant and post-employment consulting arrangement. The estimated present equivalent of this benefit, $15,000,000, is deemed invested, from December 31, 1997 in various Putnam funds. Mr. Lasser will receive the special retirement benefit except in the case of termination for cause. Mr. Lasser may elect to be paid in a lump sum, installments or as a lifetime annuity. 11 In the event of Mr. Lasser's death or disability, he or his estate will receive his base salary and annual bonus for the remainder of that year. 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 contains various provisions relating to vesting of Putnam restricted stock units, Putnam options, MMC restricted stock units and MMC options in the event that Mr. Lasser's employment is terminated due to death, disability, by MMC or Putnam without cause, or by Mr. Lasser for Good Cause. 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 options to acquire MMC stock or (iv) the restricted stock units of MMC 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 in the Lasser Agreement 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 (1) a cash amount equal to two times the average annual cash bonus received under the Putnam Partners Incentive Compensation Plan by the three participants who received the highest such bonus with respect to such year, plus (2) the total fair market value of the Putnam restricted stock units which relate to such year's annual bonus; (d) failure to grant additional Putnam options in 1999 and 2000 with respect to, in the aggregate, 105,000 or more Class B Shares or failure to grant additional Putnam restricted stock units in 1999 and 2000 with respect to, in the aggregate, 105,000 or more Class B Shares; (e) a change in control of MMC (as described in footnote 2 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). 12 SECURITY OWNERSHIP The following table reflects as of February 26, 1999 (except with respect to interests in MMC's Stock Investment Plan and Stock Investment Supplemental Plan, which are as of December 31, 1998) the number of shares of common stock which each director and each named executive officer has reported as owning beneficially or otherwise having a pecuniary interest in, and which all directors and executive officers of MMC have reported as owning beneficially as a group.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1) ----------------------------------------------- OTHER SOLE THAN VOTING SOLE VOTING SUBJECT TO AND AND EXERCISABLE INVESTMENT INVESTMENT STOCK NAME POWER POWER(2) OPTIONS TOTAL - -------------------------------------------------------------- ---------- ----------- ---------- ---------- Norman Barham................................................. 283,476 17,720 9,375 310,571 Lewis W. Bernard.............................................. 3,000 18,956 0 21,956 Frank J. Borelli.............................................. 122,511 173,753 264,375 560,639 Peter Coster.................................................. 17,451 119,584 240,000 377,035 Robert F. Erburu.............................................. 0 11,552 0 11,552 Jeffrey W. Greenberg.......................................... 11,560 88,900 202,500 302,960 Ray J. Groves................................................. 1,647 15,795 0 17,442 Stephen R. Hardis............................................. 1,000 126 0 1,126 Gwendolyn S. King............................................. 0 225 0 225 Lord Lang..................................................... 1,069 0 0 1,069 Lawrence J. Lasser............................................ 0 322,380 123,750 446,130 David A. Olsen................................................ 295,269 200,577 0 495,846 John D. Ong................................................... 0 1,418 0 1,418 George Putnam................................................. 440,994 97,310 0 538,304 Saxon Riley................................................... 0 0 3,941 3,941 Adele Smith Simmons........................................... 154,318 161,619 0 315,937 John T. Sinnott............................................... 37,839 184,555 258,750 481,144 A.J.C. Smith.................................................. 321,398 443,160 840,000 1,604,558 Frank J. Tasco................................................ 265,138 128,172 240,000 633,310 W.R.P. White-Cooper........................................... 0 17,506 6,570 24,076 All directors and executive officers as a group, including the above (22 individuals)...................................... 2,013,258 2,122,167 2,433,761 6,569,186
13 - ------------------------ (1) As of February 26, 1999, no director or named executive officer beneficially owned more than 1% of the outstanding common stock, and all directors and executive officers as a group beneficially owned approximately 2.14% of the outstanding common stock. (2) Includes the number of shares of common stock: (i) that are held in the form of shares of restricted stock that may in the future vest to such individuals; (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; (iii) that represent such individuals' interests in MMC's Stock Investment Plan; and (iv) that are subject to issuance in the future with respect to the Directors Stock Compensation Plan, cash bonus deferral plans, the Stock Investment Supplemental Plan or restricted stock units in the following aggregate amounts: Mr. Barham, 6,121 shares, Mr. Bernard, 18,956 shares, Mr. Borelli, 72,819 shares, Mr. Coster, 32,956 shares, Mr. Erburu, 11,552 shares, Mr. Greenberg, 65,086 shares, Mr. Groves, 15,795 shares, Mr. Hardis, 126 shares, Ms. King, 25 shares, Mr. Lasser, 209,839 shares, Mr. Ong 1,418 shares, Mr. Putnam, 28,310 shares, Mrs. Simmons, 8,504 shares, Mr. Sinnott, 69,408 shares, Mr. Smith, 392,302 shares, Mr. Tasco, 18,696 shares, Mr. White-Cooper, 17,506 shares and all directors and executive officers as a group, 996,167 shares. The following table reflects the number of shares of common stock beneficially owned by persons known to MMC to own more than 5% of the outstanding shares:
AMOUNT PERCENT OF BENEFICIALLY COMMON STOCK OUTSTANDING NAME AND ADDRESS OWNED AT DECEMBER 31, 1998 - ------------------------------------------------------------ ------------------ --------------------------- Wellington Management Company, LLP(1)....................... 17,790,837 6.92% 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 9, 1999. 14 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth cash and other compensation paid or accrued for services rendered in 1998, 1997 and 1996 to the Chief Executive Officer and each of the other four most highly compensated executive officers of MMC whose cash compensation exceeded $100,000. All grants or awards of MMC common stock or stock units (including the common stock underlying options) prior to June 26, 1998 and June 27, 1997 have been adjusted to give effect to MMC's three for two stock split and two for one stock split on those dates, respectively.
ANNUAL COMPENSATION LONG TERM COMPENSATION ----------------------------------- --------------------------- OTHER RESTRICTED SECURITIES ANNUAL STOCK UNDERLYING ALL OTHER COMPENSATION AWARDS OPTIONS COMPENSATION NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) ($)(2) (#) ($)(3) - ---------------------------------------- ---- --------- ---------- ------------ ----------- ------------ ------------ A.J.C. Smith............................ 1998 1,200,000 1,500,000 -- 3,795,930 300,000 68,400 Chairman and Chief Executive Officer 1997 1,200,000 1,000,000 133,519 2,056,721 300,000 48,000 Marsh & McLennan Companies, Inc. 1996 1,200,000 850,000 375,420 1,687,766 150,000 48,000 Jeffrey W. Greenberg.................... 1998 850,000 900,000 -- 782,788 60,000 34,835 President 1997 787,500 775,000 -- 702,876 60,000 30,517 Marsh & McLennan Companies, Inc. 1996 862,500 600,000 -- 43,791 60,000 7,500 Lawrence J. Lasser...................... 1998 1,000,000 17,000,000 -- -- -- 150,000 President 1997 870,000 12,000,000 -- 7,758,700 210,000 130,500 Putnam Investments, Inc. 1996 870,000 9,500,000 14,394,000(4) 325,000(5) 130,500 389,756 60,000 Peter Coster............................ 1998 775,000 600,000 198,993 710,000 45,000 44,175 President 1997 700,000 480,000 160,116 509,610 60,000 28,000 Mercer Consulting 1996 675,000 400,000 214,598 509,498 60,000 27,000 Group, Inc. John T. Sinnott......................... 1998 775,000 600,000 156,312 781,580 45,000 44,175 Chairman 1997 650,000 480,000 38,273 520,798 60,000 26,000 Marsh Inc. 1996 590,000 400,000 163,983 467,488 45,000 23,600
- -------------------------- (1) Represents the amount of payments in applicable years to the affected individuals to cover tax liabilities arising from the funding of annuities under the Benefit Equalization and Supplemental Retirement Programs, which are part of MMC's United States retirement program. 15 (2) At December 31, 1998, 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. Smith, 54,109 shares and 347,926 units worth $3,161,995 and $20,331,926, respectively; Mr. Greenberg, 31,650 shares and 43,679 units worth $1,849,547 and $2,552,492, respectively; Mr. Lasser, 142,620 shares and 188,280 units worth $8,334,356 and $11,002,613, respectively; Mr. Coster, 94,080 shares and 24,582 units worth $5,497,800 and $1,436,510, respectively; and Mr. Sinnott, 77,678 shares and 47,433 units worth $4,539,308 and $2,771,866, respectively. Holders of shares of restricted stock receive the same dividends as those paid on the outstanding shares of common stock and such shares generally vest on the January 1 next 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 and such units generally vest three years from the date of grant (except with respect to the restricted stock units granted to Mr. Lasser on December 31, 1997, which vest on February 1, 2002). Vesting of shares 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 of Directors; 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 an agreement for the sale or disposition of all or substantially all of MMC's assets. Under the 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. (3) Represents for 1998 (a) MMC matching contributions under the Stock Investment Plan of $9,500 for Mr. Smith, $6,668 for Mr. Greenberg, $9,120 for Mr. Coster and $7,489 for Mr. Sinnott, and under the Stock Investment Supplemental Plan of $58,900 for Mr. Smith, $28,167 for Mr. Greenberg, $35,055 for Mr. Coster and $36,686 for Mr. Sinnott and (b) contributions by Putnam Investments, Inc. of $24,000 to the Putnam Profit Sharing Retirement Plan and $126,000 to the Putnam Executive Deferred Compensation Plan for Mr. Lasser. (4) Mr. Lasser received a grant of 300,000 restricted stock units with respect to Class B Shares of Putnam on December 31, 1997, including the right to dividend equivalents that are equal in value to dividends paid on the outstanding Class A Common Stock of Putnam. The Putnam restricted stock units vest with respect to 150,000 units on the fourth anniversary of the date of grant and vest with respect to 150,000 units at the rate of 25% per year beginning on December 31, 1998. Upon the happening of certain corporate events affecting Putnam or MMC, vesting of shares of restricted stock units may be accelerated. (5) Mr. Lasser was granted Putnam options, which become exercisable 25% a year beginning one year from December 31, 1997, the date of grant. The exercise price of the Putnam options may be paid in cash or in Class B Shares of Putnam. Upon the happening of certain corporate events affecting Putnam or MMC, all Putnam options will become fully exercisable. 16 STOCK OPTION GRANTS IN 1998 The following table sets forth certain information concerning options to purchase common stock of MMC granted during 1998 by MMC to the Chief Executive Officer and each of the other four most highly compensated executive officers of MMC.
INDIVIDUAL GRANTS(1) ---------------------------------------------------- POTENTIAL REALIZABLE VALUE NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF SECURITIES OPTIONS STOCK PRICE APPRECIATION UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2) OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------------ NAME GRANTED 1998 ($/SH) DATE 5% ($) 10% ($) - ---------------------------------------- ---------- ------------ -------- ------------ ------------- -------------- A.J.C. Smith............................ 300,000(3) 5.0% $60.25 3/18/08 11,367,270 28,806,895 Jeffrey W. Greenberg.................... 60,000(3) 1.0% $60.25 3/18/08 2,273,454 5,761,379 Lawrence J. Lasser...................... -- -- -- -- -- -- Peter Coster............................ 45,000(3) 0.7% $60.25 3/18/08 1,705,091 4,321,034 John T. Sinnott......................... 45,000(3) 0.7% $60.25 3/18/08 1,705,091 4,321,034 MMC Stockholders(4)..................... 9,806,228,373 24,850,908,032
- -------------------------- (1) The options to purchase MMC common stock described above become exercisable 25% a year beginning one year from March 19, 1998, the date of grant. The exercise price of these options may be paid in cash or in shares of common stock, including shares of restricted stock. In the event of a change in control of MMC (as described in footnote 2 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 Securities and Exchange Commission ("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) The grant includes 6,600 incentive stock options, with the balance being granted as nonqualified stock options. (4) The dollar amounts reflected herein are included for comparative purposes to show the gain that would be achieved by the holders of the outstanding common stock of MMC at the assumed stock price appreciation rates at the end of the 10-year term of the options granted on March 19, 1998 at an exercise price of $60.25. 17 AGGREGATED STOCK OPTION EXERCISES IN 1998 AND STOCK OPTION VALUE AT DECEMBER 31, 1998 The following table sets forth certain information concerning stock options exercised during 1998 by the Chief Executive Officer and each of the other four most highly compensated executive officers of MMC and the number and value of specified unexercised options at December 31, 1998. The value of unexercised in-the-money stock options at December 31, 1998 shown below is presented pursuant to SEC rules and, with respect to MMC common stock, is based on the December 31, 1998 closing price on the New York Stock Exchange of $58.4375 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, 1998 was $76.97 per share. The actual amount, if any, realized upon exercise of stock options will depend upon the market price of the stock relative to the exercise price per share at the time the stock option is exercised. There is no assurance that the values of unexercised in-the-money stock options reflected in this table will be realized.
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT SHARES DECEMBER 31, 1998 DECEMBER 31, 1998 ACQUIRED ON VALUE ----------------------------- --------------------------- EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE NAME (#) ($) (#) (#) ($) ($) - ------------------------------------- ----------- ------------ ----------- -------------- ----------- ------------- A.J.C. Smith......................... -- -- 652,500 637,500 18,133,750 7,078,125 Jeffrey W. Greenberg................. -- -- 157,500 172,500 4,376,407 2,680,470 Lawrence J. Lasser................... 127,500 3,346,875 93,750 198,750 1,773,595 2,990,157 81,250(1) 243,750(1) 2,598,063 7,794,188 Peter Coster......................... 90,000 2,769,375 198,750 131,250 5,415,938 1,937,813 John T. Sinnott...................... -- -- 221,250 123,750 10,370,078 1,737,188
- -------------------------- (1) Represents options to acquire Class B Shares of Putnam granted to Mr. Lasser on December 31, 1997. See "Employment Agreements" above. 18 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 - ----------------------------------------------------- --------- --------- --------- --------- --------- $ 600,000............................................ 56,704 113,409 226,819 331,524 391,524 $ 700,000............................................ 66,704 133,409 266,819 389,524 459,524 $ 800,000............................................ 76,704 153,409 306,819 447,524 527,524 $ 900,000............................................ 86,704 173,409 346,819 505,524 595,524 $1,000,000........................................... 96,704 193,409 386,819 563,524 663,524 $1,100,000........................................... 106,704 213,409 426,819 621,524 731,524 $1,200,000........................................... 116,704 233,409 466,819 679,524 799,524 $1,300,000........................................... 126,704 253,409 506,819 737,524 867,524 $1,400,000........................................... 136,704 273,409 546,819 795,524 935,524
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 five individuals named above, other than Mr. Lasser who participates in the Putnam Profit Sharing and related plans and not in MMC's U.S. retirement program, the 1998 compensation used to calculate the Maximum Average Salary and the number of years of credited service are as follows: Mr. Smith, $1,200,000, 36 years; Mr. Greenberg, $850,000, 3 years; Mr. Coster, $775,000, 37 years; and Mr. Sinnott, $775,000, 36 years. Mr. Lasser is also entitled to receive a special retirement benefit in accordance with the terms of the Lasser Agreement. See "Employment Agreements" above. 19 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 of Directors, 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 general 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 25-30 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 20 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, Inc. 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 included 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, length of service, affordability and marketplace 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 36% of total compensation (excluding stock options) in 1998 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, as it did for 1998. 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 earnings growth, and marketplace compensation levels. For 1998, bonus awards at Putnam Investments, Inc. reflected continued exceptional financial performance of that business, while awards to executives in MMC's other businesses were, on average, seven percentage points above 1997 (as a percentage of salary). For MMC's senior management group, individual bonuses constituted 30% of total compensation (excluding stock options) for 1998. 21 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 1998, such awards for this group accounted for 26% (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 level 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 1998 to MMC's senior management group made up 8% 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 organizational level, performance and marketplace practices. 22 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 above are applied in assessing the performance and determining the compensation of the Chairman and Chief Executive Officer of MMC, A.J.C. Smith. The 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. Smith. Consideration is also given to his leadership and influence on the long-term strength and performance of MMC. The annual base salary for Mr. Smith during 1998 was $1,200,000, unchanged since January 1, 1996. With regard to cash bonus, Mr. Smith participates in the same MMC annual incentive plan as MMC's senior management group. His 1998 cash bonus award under the plan was $1,500,000. Based on the previously referenced review of chief executive officer compensation for 1997 (latest data available), Mr. Smith's 1998 cash compensation was positioned at about the 40th percentile of the 1997 market survey group. In connection with long-term compensation, Mr. Smith was granted 12,000 shares of restricted stock in 1998 under terms previously described. In addition, Mr. Smith was granted 30,876 restricted stock units in connection with his 1997 cash bonus award, as well as 4,500 restricted stock units in lieu of a salary increase. He also received 27,142 restricted stock units for deferring receipt of vested shares of restricted stock. The combined value of his restricted stock and restricted stock unit grants was $3,795,930. Based on the data regarding chief executive officers described above, Mr. Smith's 1998 long-term compensation (including any long-term incentive plan payouts but excluding stock options) was at about the 90th percentile of the 1997 survey market. Mr. Smith was granted 300,000 stock options during 1998, and the size of this grant approximated the 75th percentile of the 1997 survey market. Total compensation for Mr. Smith, which includes all elements of pay from the Summary Compensation Table except stock option grants, was $6,564,330 in 1998. Based on the data from the comparison group referenced above, such compensation for Mr. Smith was at about the 65th percentile of the 1997 survey market. Lewis W. Bernard Robert F. Erburu Ray J. Groves 23 COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN The following graph compares MMC's cumulative total stockholder return on its common 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 Associates, Inc., over the five-year period from December 31, 1993 through December 31, 1998. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MMC S&P 500 COMPOSITE INDUSTRY INDEX 1993 100 100 100 1994 101 101 91 1995 117 139 141 1996 142 171 190 1997 209 229 307 1998 253 294 270
Assumes $100 invested on December 31, 1993 with dividends reinvested. 24 TRANSACTIONS WITH MANAGEMENT AND OTHERS; OTHER INFORMATION On September 4, 1998, MMC commenced a cash tender offer to acquire all of the capital stock of Sedgwick Group plc ("Sedgwick") for a total cash consideration of approximately $2.2 billion. The offer was declared unconditional on November 3, 1998 and the compulsory acquisition of all previously untendered Sedgwick shares was completed in February, 1999. Messrs. Riley and White-Cooper, as former stockholders of Sedgwick, received approximately $185,609 and $245,747, respectively, in exchange for their Sedgwick shares and received options to purchase 10,510 and 9,855 shares of common stock of MMC, respectively, pursuant to an election to rollover certain of their Sedgwick options. In connection with the acquisition of Sedgwick, on November 19, 1998 Messrs. Riley and White-Cooper were elected to the Board of Directors of MMC. Mr. Riley is also a member of the MMC International Advisory Board, whose members are currently paid $50,000 a year. 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 common stock of MMC. 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 1998 all Section 16(a) filing requirements applicable to such individuals were complied with except for a report covering one transaction filed late by each of Mr. Greenberg and Mr. Sinnott. PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION The Board of Directors has approved an amendment to the first paragraph of Article FOURTH of MMC Restated Certificate of Incorporation to increase the aggregate number of shares of MMC common stock which MMC is authorized to issue from four hundred million (400,000,000) to eight hundred million (800,000,000). MMC's authorized preferred stock of six million (6,000,000) shares will remain unchanged. The complete text of the proposed amendment is attached to this Proxy Statement as Exhibit A. As of February 26, 1999, MMC had 257,865,857 shares of common stock issued and outstanding and approximately 34,100,000 shares committed to be issued under MMC's various employee benefit and compensation plans. The remaining number of authorized shares of common stock available for issuance is approximately 108,034,143. By amending the Restated Certificate of Incorporation to authorize an additional 400 million shares of common stock, the Board of Directors would have available the number of shares necessary to meet MMC's future needs without experiencing the time 25 delay of having to seek stockholder approval. The additional shares proposed to be authorized would be issuable from time to time for any corporate purpose, including stock splits, stock dividends, employee benefit and compensation plans, acquisitions and public or private sale for cash as a means of raising capital. MMC does not at this time have any understanding, arrangement or agreement pursuant to which any of the additional shares to be authorized would be issued. If approved by the stockholders, the proposed increase in the number of authorized shares of common stock could have the effect of making it more difficult for another party to gain control of MMC on an unfriendly basis, since MMC could issue such additional shares to a third party. MMC knows of no party with intentions of gaining control of MMC and MMC has no present plans for selling such shares in connection with such a situation. Rather, MMC believes that approval by MMC stockholders of the proposed amendment will provide the Board of Directors with flexibility and will enhance its ability to respond to various corporate opportunities which may arise in the future. Although the purpose of seeking an increase in the number of authorized shares of common stock is not intended for anti-takeover purposes, SEC rules require disclosure of charter, by-law and other provisions that could have an anti-takeover effect. These include: (i) a classified Board of Directors providing for three classes of directors serving three-year terms; (ii) Board authority to issue one or more series of preferred stock on terms to be designated by the Board of Directors, (iii) a fair price provision requiring a supermajority vote for certain business combination transactions involving a significant stockholder; (iv) a prohibition on stockholder actions by written consent; (v) an advance notice provision; and (vi) a stockholder rights plan. The amendment to Article FOURTH does not alter the rights and privileges of MMC's outstanding shares or the manner in which the Board of Directors may authorize the issuance of additional shares of common or preferred stock. Holders of MMC common stock have no preemptive rights and current stockholders would not have any preferential right to purchase any of the additional common shares. Under Delaware law, the favorable vote of the holders of a majority of the outstanding shares of MMC common stock will be required to adopt the proposed amendment. Unless otherwise directed in the proxy, the persons named in the proxy will vote FOR the proposal to amend MMC's Restated Certificate of Incorporation increasing the number of authorized shares of Common Stock. PROPOSAL TO APPROVE 1999 EMPLOYEE STOCK PURCHASE PLAN The Board of Directors of MMC has placed a proposal to approve the Marsh & McLennan Companies 1999 Employee Stock Purchase Plan (the "New Plan") on the agenda for the Annual Meeting. The New Plan, which is substantially identical to the 1994 Employee Stock Purchase Plan (the "1994 Plan"), is intended to replace the 1994 Plan after the end of the 1998-1999 offering period 26 thereunder. The New Plan was adopted by MMC's Board of Directors at its meeting on March 18, 1999. The New Plan will be administered by the Compensation Committee of the Board of Directors. None of the members of the Compensation Committee may participate in the New Plan. The purpose of the New Plan is to provide eligible employees, including those who have been participants in the 1994 Plan, a convenient opportunity to purchase common stock of MMC through annual offerings financed by payroll deductions. Under the New Plan, a maximum of 20 million (20,000,000) shares of MMC common stock, plus the amount of shares (not to exceed 2.8 million) remaining in the 1994 Plan at the end of the 1998-1999 offering period thereunder, may be sold. All employees scheduled to work more than 20 hours per week with at least six months of service who are employed by MMC or a participating subsidiary will be eligible to participate in the New Plan. As of December 31, 1998, MMC and its subsidiaries had approximately 54,200 employees worldwide. Employees who elect to participate in the New Plan may have up to fifteen percent (15%) of their base compensation deducted from their pay and accumulated with interest until the end of the offering period. Participating employees may at any time withdraw from an offering and receive their contributions with interest. At the end of each offering period, each employee's accumulated payroll deductions plus interest will be applied to the purchase of up to twenty-five thousand dollars ($25,000) (based upon the undiscounted price as of the beginning of the offering period) worth of shares of MMC common stock. In addition, the maximum number of shares which a participating employee may purchase in any one offering period shall be the number of shares determined by dividing (i) such employee's annual base compensation as of the pay period immediately preceding the start of an offering period by (ii) the fair market value of a share of stock on such date. The price of such shares will be a price set by or on the basis of a formula determined by the Compensation Committee at the inception of the offering. Under the United States Internal Revenue Code and the New Plan, the price may not be less than the lesser of 85% of the fair market value of MMC common stock at either the beginning or the end of the offering period. The New Plan also provides that, in the event of a change in control (as defined in the New Plan), if the Compensation Committee determines that the operation or administration of the New Plan could prevent participating employees from obtaining the benefit of the timely exercise of their options under the New Plan, the New Plan may be terminated in any manner deemed by the Compensation Committee to provide equitable treatment to participating employees. The first offering under the New Plan will begin on October 1, 1999. Based upon their payroll deductions during the 1997-1998 offering period under the 1994 Plan, which ended on September 30, 27 1998, the following number of shares were purchased by the individuals listed in the table below at a dollar value based upon the undiscounted fair market value of $50.06 per share on such date:
DOLLAR VALUE NUMBER OF NAME AND POSITION ($) SHARES (#) - ------------------------------------------------------------------------------ --------------- ---------- A.J.C. Smith.................................................................. $ 24,479 489 Jeffrey W. Greenberg.......................................................... $ 24,479 489 Lawrence J. Lasser............................................................ -- -- Peter Coster.................................................................. $ 24,479 489 John T. Sinnott............................................................... -- -- All Executive Officers as a Group (11 individuals)............................ $ 171,355 3,423 All Employees, including non-Executive Officers, as a Group................... $ 96,718,924 1,932,060
For United States federal income tax purposes, an employee does not realize income at the time of entry into the New Plan or at the time a share is purchased. If no disposition of the stock is made within two years from the beginning of an offering period, and one year elapses from the date the share was transferred to the employee, upon subsequent disposition of the stock, ordinary income will be realized to the extent of the lesser of (i) the excess of the fair market value on the offering date over the option price or (ii) the excess of the net proceeds of sale over the price paid. Any further gain will be treated as capital gains. No income tax deduction will be allowed MMC for shares transferred to an employee, provided such shares are held for the required periods described above. If the shares are disposed of without satisfying both holding period requirements, ordinary income will be realized at the time of such disposition in an amount equal to the difference between the fair market value of the shares as of the time such shares were purchased and the purchase price of such shares. In addition, any difference between the disposition price and the fair market value of the shares as of the time the shares were purchased will be treated as capital gain or loss. MMC will be allowed a deduction in an amount equal to the ordinary income recognized by the participant. The affirmative vote of a majority of the shares of MMC common stock present or represented and entitled to vote at the Annual Meeting is required to approve the proposal set forth herein. Unless otherwise directed in the proxy, the persons named in the proxy will vote FOR the proposal to approve the New Plan. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors, upon the recommendation of the Audit Committee, has selected the firm of Deloitte & Touche LLP, independent public accountants, to audit the financial statements of MMC for the fiscal year ending December 31, 1999. Deloitte & Touche LLP acted as MMC's independent public accountants for the fiscal year ended December 31, 1998. Representatives of Deloitte & Touche LLP will attend the Annual 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 common stock present or represented and entitled to vote at the Annual Meeting is required to ratify the appointment of Deloitte & 28 Touche LLP. Unless otherwise directed in the proxy, the persons named in the proxy will vote FOR the ratification of Deloitte & Touche LLP. SOLICITATION OF PROXIES The Board of Directors of MMC hereby solicits proxies for use at the 1999 Annual Meeting and at any adjournment thereof. Stockholders who execute a proxy may still attend the Annual 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 Annual 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 Annual Meeting will not revoke a proxy which was previously submitted to MMC. The cost of this proxy solicitation is borne directly by MMC. Georgeson & Company, 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 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. STOCKHOLDER AND OTHER PROPOSALS Stockholders who wish to present a proposal and have it considered for inclusion in MMC's proxy materials for the 2000 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, 1999. Stockholders who wish to present a proposal at the 2000 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 and should note that any such notice received by the Secretary of MMC on or after March 24, 2000 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 29 EXHIBIT A PROPOSED AMENDMENT TO ARTICLE FOURTH OF THE RESTATED CERTIFICATE OF INCORPORATION OF MARSH & MCLENNAN COMPANIES, INC. INCREASE IN AUTHORIZED CAPITAL STOCK Article FOURTH of the Restated Certificate of Incorporation is proposed to be amended by revising the first paragraph of Article FOURTH to read in its entirety as follows: FOURTH: The total number of shares of stock which the Corporation has the authority to issue is 806,000,000 of which 6,000,000 are shares of Preferred Stock with a par value of one dollar per share (hereinafter sometimes referred to as "Preferred Stock"), and 800,000,000 are shares of Common Stock with a par value of one dollar per share (hereinafter sometimes referred to as "Common Stock"). 30 Marsh & McLennan Companies, Inc. 1166 Avenue of the Americas New York, New York 10036-2774 PROXY PROXY MARSH & MCLENNAN COMPANIES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 1999 ANNUAL MEETING The undersigned hereby appoints A.J.C. Smith and Gregory Van Gundy 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 20, 1999 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 PARTICIPANTS IN MARSH & McLENNAN COMPANIES STOCK INVESTMENT PLAN This card also constitutes the confidential voting instructions of the participants in the Marsh & McLennan Companies Stock Investment Plan. By signing and returning this card, the undersigned directs Bankers Trust Company, Trustee under the Stock Investment 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 Plan upon all matters at the Annual Meeting of Stockholders of the Company on May 20, 1999 and at any adjournment thereof. Provided this card is received by May 14, 1999, voting rights will be exercised by the Trustee as directed or, if not specifically directed, FOR the items stated herein. Under the Plan, the Trustee 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 20190 NEWARK, N.J. 07101-9758
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote FOR ALL listed below _____ for all nominees listed below _____ EXCEPT _____ Nominees: Jeffrey W. Greenberg, Stephen R. Hardis, The Rt. Hon. Lord Lang of Monkton, John D. Ong, Saxon Riley, Adele Smith 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. Adopt an amendment to the Restated Certificate of Incorporation increasing the number of authorized shares of common stock. FOR _____ AGAINST _____ ABSTAIN ______ 3. Approval of Marsh & McLennan Companies 1999 Employee Stock Purchase Plan. FOR _____ AGAINST _____ ABSTAIN ______ 4. Ratification of Deloitte & Touche LLP as auditors for 1999. 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, 2, 3 AND 4 AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT THEREOF. CHANGE OF ADDRESS AND OR COMMENTS MARK HEre ____ 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: _________________________________________, 1999 ______________________________________________________ ______________________________________________________ Votes must be indicated (x) in Black or Blue ink. _____ PLEASE RETURN THS CARD PROMPTLY USING THE ACCOMPANYING ENVELOPE
MARSH & MCLENNAN COMPANIES, INC. 1999 ANNUAL MEETING OF STOCKHOLDERS - ----------------------------------------------------------------------------------------------------------------------------------- VOTE BY TELEPHONE OR INTERNET OR MAIL 24 HOURS A DAY, 7 DAYS A WEEK - -------------------------------------- ----------------------------------- ----------------------------------- TELEPHONE INTERNET 800-650-1533 OR HTTPS://PROXY.SHAREHOLDER.COM/mmc OR MAIL - -------------------------------------- ----------------------------------- ----------------------------------- Use any touch-tone telephone to vote Use the Internet to vote your Mark, sign and date your Proxy Form your proxy. Have your Proxy Form in proxy. Have your Proxy Form in hand and return it in the postage-paid hand when you call. You will be when you access the website. You envelope we have provided. prompted to enter your control number, will be prompted to enter your located in the box below, and then control number, located in the box follow the simple directions. below, to create an electronic ballot. - ---------------------------------------------------------------- --------------------------------------------------------------- Your telephone or Internet vote authorizes the named proxies to If you submitted your proxy by telephone or the Internet there vote your shares in the same manner as if you marked, signed and is no need for you to mail back your Proxy Form returned your Proxy Form. - ---------------------------------------------------------------- --------------------------------------------------------------- CALL TOLL-FREE TO VOTE IT'S FAST AND CONVENIENT 800-650-1533 --------------------------------------- CONTROL NUMBER FOR TELEPHONE / INTERNET VOTING --------------------------------------- ^DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET^ - -----------------------------------------------------------------------------------------------------------------------------------
Putnam Investments Inc. Profit Sharing Retirement Plan Confidential Voting Instructions 1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote FOR ALL listed below _____ for all nominees listed below _____ EXCEPT _____ Nominees: Jeffrey W. Greenberg, Stephen R. Hardis, The Rt. Hon. Lord Lang of Monkton, John D. Ong, Saxon Riley, Adele Smith 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. Adopt an amendment to the Restated Certificate of Incorporation increasing the number of authorized shares of common stock. FOR _____ AGAINST _____ ABSTAIN ______ 3. Approval of Marsh & McLennan Companies 1999 Employee Stock Purchase Plan. FOR _____ AGAINST _____ ABSTAIN ______ 4. Ratification of Deloitte & Touche LLP as auditors for 1999. FOR _____ AGAINST _____ ABSTAIN ______ THE ALLOCATED SHARES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTIONS ARE MADE, THEY WILL BE VOTED FOR ITEMS 1, 2, 3 AND 4 AND ACCORDING TO THE DISCRETION OF THE TRUSTEES ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT THEREOF. Sign here as name(s) appear on card. The signer hereby revokes all instructions 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: _________________________________________, 1999 ______________________________________________________ ______________________________________________________ Votes must be indicated (x) in Black or Blue ink. _____ PLEASE RETURN THS CARD PROMPTLY USING THE ACCOMPANYING ENVELOPE
PUTNAM INVESTMENTS, INC. PROFIT SHARING RETIREMENT PLAN 1999 ANNUAL MEETING OF STOCKHOLDERS OF MARSH & McLENNAN COMPANIES, INC. NOTICE TO PARTICIPANTS By signing and returning this card, the undersigned hereby directs the Trustees of the Putnam Investments, Inc. Profit Sharing Retirement Plan to vote in person or by proxy all of the shares of common stock of Marsh & McLennan Companies, Inc. (the "Company") allocated to the undersigned under the Plan upon all matters at the Annual Meeting of Stockholders of the Company, on May 20, 1999 and at any adjournment thereof. Information regarding the Annual Meeting is set forth in the enclosed Proxy Statement. Also enclosed is Marsh & McLennan's 1998 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 in the envelope provided. Your instructions to the Trustees will be kept confidential. Instructions must be received by May 14, 1999 in order for them to be tabulated for voting by the Trustees. Very truly yours, PUTNAM INVESTMENTS, INC. PROFIT SHARING RETIREMENT PLAN Dated: March 31, 1999 -----END PRIVACY-ENHANCED MESSAGE-----