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Proc-Type: 2001,MIC-CLEAR
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Delaware |
36-2668272 |
|||||
(State or other
jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Name of Each Exchange on Which
registered |
|||||
---|---|---|---|---|---|---|
Common Stock, par
value $1.00 per share |
New York Stock Exchange |
|||||
Preferred Stock
Purchase Rights |
Chicago Stock Exchange |
|||||
Pacific Exchange |
||||||
London Stock Exchange |
|
the economic and reputational impact of: litigation and regulatory proceedings brought by federal and state regulators and law enforcement authorities concerning our insurance and reinsurance brokerage operations and our investment management operations (including the complaint filed in October 2004 by the New York Attorney Generals office relating to market service agreements and other matters, and proceedings relating to market-timing matters at Putnam); and class actions, derivative actions and individual suits filed by policyholders and shareholders in connection with the foregoing; |
|
the extent to which we are able to replace the revenues we previously derived from contingent commissions, which we eliminated in late 2004; |
|
our ability to retain existing clients and attract new business, particularly in our Risk and Insurance Services segment, and our ability to continue employment of key revenue producers and managers; |
|
period-to-period revenue fluctuations relating to the net effect of new and lost business production and the timing of policy inception dates; |
|
the impact on our commission revenues of changes in the availability of, and the premiums carriers charge for, insurance and reinsurance products, including the degree and timing of the impact on reinsurance premium rates of 2005 hurricanes; |
|
the actual and relative investment performance of Putnams mutual funds and institutional and other advisory accounts, and the extent to which Putnam reverses its recent net redemption experience, increases assets under management and maintains management and administrative fees at historical levels; |
|
our ability to implement our restructuring initiatives and otherwise reduce expenses; |
|
the impact of competition, including with respect to pricing and the emergence of new competitors; |
|
the impact of increasing focus by regulators, clients and others on potential conflicts of interest; |
|
changes in the value of MMCs investments in individual companies and investment funds; |
|
our ability to make strategic acquisitions and to integrate, and realize expected synergies, savings or strategic benefits from, acquired businesses; |
|
our ability to meet our financing needs by generating cash from operations and accessing external financing sources, including the potential impact of rating agency actions on our cost of financing or ability to borrow; |
|
the impact on our operating results of foreign exchange fluctuations; and |
|
changes in the tax or accounting treatment of our operations, and the impact of other legislation and regulation in the jurisdictions in which we operate. |
Information
Concerning Forward-Looking Statements |
i | ||
PART
I |
|||
Item
1 Business |
1 | ||
Item
1A Risk Factors |
19 | ||
Item
1B Unresolved Staff Comments |
25 | ||
Item
2 Properties |
25 | ||
Item
3 Legal Proceedings |
26 | ||
Item
4 Submission of Matters to a Vote of Security Holders |
26 | ||
PART
II |
|||
Item
5 Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities |
27 | ||
Item
6 Selected Financial Data |
28 | ||
Item
7 Managements Discussion and Analysis of Financial
Condition and Results of Operations |
29 | ||
Item
7A Quantitative and Qualitative Disclosures About Market Risk |
52 | ||
Item
8 Financial Statements and Supplementary Data |
53 | ||
Item
9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure |
111 | ||
Item
9A Controls and Procedures |
111 | ||
Item
9B Other Information |
113 | ||
PART
III |
|||
Item
10 Directors and Executive Officers of the Registrant |
113 | ||
Item
11 Executive Compensation |
114 | ||
Item
12 Security Ownership of Certain Beneficial Owners and Management |
114 | ||
Item
13 Certain Relationships and Related Transactions |
116 | ||
Item
14 Principal Accounting Fees and Services |
117 | ||
PART
IV |
|||
Item
15 Exhibits, Financial Statement Schedules |
117 | ||
Signatures |
121 |
ITEM
1. |
BUSINESS. |
|
Risk and Insurance Services, which includes risk management and insurance and reinsurance broking and services; |
|
Risk Consulting and Technology, which includes risk consulting and related investigative, intelligence, financial, security and technology services; |
|
Consulting, which includes human resource consulting and related services, and specialized management and economic consulting services; and |
|
Investment Management, which includes investment management for both individual and institutional investors. |
|
risk management, insurance broking and insurance program management services, primarily under the name of Marsh; and |
|
reinsurance broking, catastrophe and financial modeling services and related advisory functions, primarily under the name of Guy Carpenter. |
|
Consulting Services; |
|
Corporate Advisory & Restructuring; |
|
Security; and |
|
Technology Services. |
|
Mercer Human Resource Consulting, consisting of the following lines of business: |
|
Retirement & Investment Consulting |
|
Human Resource (HR) Services & Investments |
|
Health & Benefits |
|
Human Capital |
|
Mercer Specialty Consulting, consisting of the following lines of business: |
|
Management Consulting |
|
Organizational Design and Change Management |
|
Economic Consulting |
December 31, 2005 |
December 31, 2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Mutual
Funds: |
||||||||||
Growth
Equity |
$ | 31 | $ | 38 | ||||||
Value
Equity |
37 | 41 | ||||||||
Blend
Equity |
26 | 28 | ||||||||
Fixed
Income |
32 | 36 | ||||||||
Total Mutual
Fund Assets |
126 | 143 | ||||||||
Institutional: |
||||||||||
Equity |
34 | 40 | ||||||||
Fixed
Income |
29 | 30 | ||||||||
Total
Institutional Assets |
63 | 70 | ||||||||
Total
Ending Assets |
$ | 189 | $ | 213 | ||||||
Assets
from Non-US Investors |
||||||||||
(Included
above) |
$ | 32 | $ | 38 | ||||||
Average
Assets Under Management: |
||||||||||
Quarter-to-Date |
$ | 188 | $ | 211 | ||||||
Year-to-Date |
$ | 196 | $ | 217 | ||||||
Net
Redemptions including Dividends Reinvested: |
||||||||||
Quarter-to-Date |
$ | (6.4 | ) | $ | (10.7 | ) | ||||
Year-to-Date |
$ | (31.7 | ) | $ | (51.0 | ) | ||||
Impact of
Market/Performance on Ending Assets Under Management |
$ | 7.2 | $ | 16.5 |
|
the Putnam Funds; |
|
insurance products, such as variable annuities and variable life insurance policies, that use mutual funds as the underlying funding vehicles; and |
|
separately managed accounts and other platforms sponsored by broker-dealers, financial planners and registered investment advisers. |
|
Guidelines for Corporate Governance; |
|
Code of Business Conduct and Ethics; |
|
Procedures for addressing complaints and concerns of employees and others; and |
|
the charters of the Audit Committee, Compensation Committee and Directors and Governance Committee of MMCs Board of Directors. |
Item
1A. |
Risk Factors. |
|
the economic and political conditions in foreign countries; |
|
the imposition of local investment or other restrictions by foreign governments; |
|
the imposition of controls or limitations on the conversion of foreign currencies or remittance of dividends and other payments from foreign subsidiaries; |
|
the imposition of withholding and other taxes on remittances and other payments from subsidiaries; |
|
difficulties in monitoring employees in geographically dispersed locations; and |
|
costs and difficulties in complying with a wide variety of foreign laws. |
Item
1B. |
Unresolved Staff Comments. |
Item
2. |
Properties. |
Item
3. |
Legal Proceedings. |
Item
4. |
Submission of Matters to a Vote of Security Holders. |
2005 Stock Price Range |
2004 Stock Price Range |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
High |
Low |
High |
Low |
||||||||||||||||
First
Quarter |
$ | 34.25 | 27.00 | $ | 49.69 | 45.67 | |||||||||||||
Second
Quarter |
$ | 30.90 | 26.87 | $ | 47.51 | 42.05 | |||||||||||||
Third
Quarter |
$ | 30.50 | 26.67 | $ | 46.66 | 42.10 | |||||||||||||
Fourth
Quarter |
$ | 33.42 | 26.79 | $ | 47.35 | 22.75 | |||||||||||||
$ | 34.25 | 26.67 | $ | 49.69 | 22.75 |
Period |
(a) Total Number of Shares Purchased |
(b) Average Price Paid per Share |
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |
(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
October 1,
2005 October 31, 2005 |
0 | | 0 | 49,904,636 | ||||||||||||||
November 1,
2005 November 30, 2005 |
0 | | 0 | 49,904,636 | ||||||||||||||
December 1, 2005 December 31, 2005 |
0 | | 0 | 49,904,636 | ||||||||||||||
Total |
0 | | 0 | 49,904,636 |
(1) |
On March 18, 1999, MMCs board of directors authorized the repurchase of up to 40 million shares of MMCs common stock, and on May 18, 2000 the board further authorized the repurchase of up to an additional 88 million shares. There is no expiration date specified under either of these authorizations. While MMC made no share repurchases in 2005, in previous years MMC has repurchased, and in the future may repurchase, shares of its common stock, in the open market or otherwise, for treasury and to meet requirements for the issuance of shares relating to MMCs various stock compensation and benefit programs. The timing and level of MMCs share repurchase activity may be affected by MMCs priorities relating to the use of its cash flows for a variety of purposes. These purposes may include, in addition to share repurchases, the funding of dividends, investments, pension contributions and debt reduction. |
Item
6. |
Selected Financial Data. |
For
the Years Ended December 31, (In millions except per share figures)(c) |
|
2005
|
|
2004
|
|
2003
|
|
2002
|
|
2001
|
|
Compound Growth Rate 20002005 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue: |
||||||||||||||||||||||||
Service
Revenue |
$ | 11,469 | $ | 11,561 | $ | 11,100 | $ | 10,039 | $ | 9,735 | 3 | % | ||||||||||||
Investment Income (Loss) |
183 | 200 | 100 | 67 | (142 | ) | 19 | % | ||||||||||||||||
Total Revenue |
11,652 | 11,761 | 11,200 | 10,106 | 9,593 | 3 | % | |||||||||||||||||
Expenses: |
||||||||||||||||||||||||
Compensation
and Benefits |
6,945 | 6,706 | 5,710 | 5,025 | 4,729 | 8 | % | |||||||||||||||||
Other
Operating Expenses |
3,811 | 3,486 | 3,032 | 2,845 | 3,125 | 4 | % | |||||||||||||||||
Regulatory and Other Settlements |
40 | 969 | 10 | | | |||||||||||||||||||
Total Expenses |
10,796 | 11,161 | 8,752 | 7,870 | 7,854 | 6 | % | |||||||||||||||||
Operating
Income |
856 | (a) | 600 | (a) | 2,448 | 2,236 | 1,739 | (b) | (17 | )% | ||||||||||||||
Interest
Income |
47 | 21 | 24 | 19 | 23 | |||||||||||||||||||
Interest Expense |
(332 | ) | (219 | ) | (185 | ) | (160 | ) | (196 | ) | ||||||||||||||
Income
Before Income Taxes and Minority Interest |
571 | 402 | 2,287 | 2,095 | 1,566 | (22 | )% | |||||||||||||||||
Income
Taxes |
192 | 240 | 751 | 731 | 591 | |||||||||||||||||||
Minority Interest, Net of Tax |
10 | 8 | 20 | 18 | 13 | |||||||||||||||||||
Income From Continuing Operations |
369 | 154 | 1,516 | 1,346 | 962 | (21 | )% | |||||||||||||||||
Discontinued Operations, Net of Tax |
35 | 22 | 24 | 19 | 12 | 31 | % | |||||||||||||||||
Net Income |
$ | 404 | $ | 176 | $ | 1,540 | $ | 1,365 | $ | 974 | (19 | )% | ||||||||||||
Basic
Income Per Share Information: |
||||||||||||||||||||||||
Income
From Continuing Operations |
$ | 0.69 | $ | 0.29 | $ | 2.85 | $ | 2.49 | $ | 1.75 | (20 | )% | ||||||||||||
Income
From Discontinued Operations |
$ | 0.06 | $ | 0.04 | $ | 0.04 | $ | 0.03 | $ | 0.02 | 25 | % | ||||||||||||
Net
Income |
$ | 0.75 | $ | 0.33 | $ | 2.89 | $ | 2.52 | $ | 1.77 | (19 | )% | ||||||||||||
Average Number of Shares Outstanding |
538 | 526 | 533 | 541 | 550 | |||||||||||||||||||
Diluted
Income Per Share Information: |
||||||||||||||||||||||||
Income
From Continuing Operations |
$ | 0.67 | $ | 0.29 | $ | 2.77 | $ | 2.42 | $ | 1.67 | (20 | )% | ||||||||||||
Income
From Discontinued Operations |
$ | 0.07 | $ | 0.04 | $ | 0.04 | $ | 0.03 | $ | 0.03 | 28 | % | ||||||||||||
Net
Income |
$ | 0.74 | $ | 0.33 | $ | 2.81 | $ | 2.45 | $ | 1.70 | (18 | )% | ||||||||||||
Average Number of Shares Outstanding |
543 | 535 | 548 | 557 | 572 | |||||||||||||||||||
Dividends
Paid Per Share |
$ | 0.68 | $ | 1.30 | $ | 1.18 | $ | 1.09 | $ | 1.03 | (6 | )% | ||||||||||||
Return
on Average Stockholders Equity |
8 | % | 3 | % | 29 | % | 27 | % | 19 | % | ||||||||||||||
Year-end
Financial Position: |
||||||||||||||||||||||||
Working
capital |
$ | 911 | $ | 256 | $ | 189 | $ | (199 | ) | $ | (622 | ) | ||||||||||||
Total
assets |
$ | 17,892 | $ | 18,498 | $ | 15,053 | $ | 13,855 | $ | 13,769 | ||||||||||||||
Long-term
debt |
$ | 5,044 | $ | 4,691 | $ | 2,910 | $ | 2,891 | $ | 2,334 | ||||||||||||||
Stockholders equity |
$ | 5,360 | $ | 5,056 | $ | 5,451 | $ | 5,018 | $ | 5,173 | ||||||||||||||
Total
shares outstanding (excluding treasury shares) |
546 | 527 | 527 | 538 | 548 | |||||||||||||||||||
Other
Information: |
||||||||||||||||||||||||
Number
of employees |
54,900 | 63,900 | 60,400 | 59,400 | 57,800 | |||||||||||||||||||
Stock
price ranges |
||||||||||||||||||||||||
U.S.
exchanges High |
$ | 34.25 | $ | 49.69 | $ | 54.97 | $ | 57.30 | $ | 59.03 | ||||||||||||||
Low |
$ | 26.67 | $ | 22.75 | $ | 38.27 | $ | 34.61 | $ | 39.70 |
(a) |
Includes restructuring costs of $317 million and $337 million in 2005 and 2004, respectively. |
(b) |
Includes charges related to September 11 and restructuring costs of $396 million. |
(c) |
Certain balances have been reclassified to conform with current presentation. See Note 1 to the consolidated financial statements. |
(In millions, except per share figures) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue: |
||||||||||||||
Service
Revenue |
$ | 11,469 | $ | 11,561 | $ | 11,100 | ||||||||
Investment Income (Loss) |
183 | 200 | 100 | |||||||||||
Operating Revenue |
11,652 | 11,761 | 11,200 | |||||||||||
Expense: |
||||||||||||||
Compensation
and Benefits |
6,945 | 6,706 | 5,710 | |||||||||||
Other
Operating Expenses |
3,811 | 3,486 | 3,032 | |||||||||||
Regulatory and Other Settlements |
40 | 969 | 10 | |||||||||||
Operating Expenses |
10,796 | 11,161 | 8,752 | |||||||||||
Operating Income |
$ | 856 | $ | 600 | $ | 2,448 | ||||||||
Income From Continuing Operations |
$ | 369 | $ | 154 | $ | 1,516 | ||||||||
Discontinued Operations, net of tax |
35 | 22 | 24 | |||||||||||
Net Income |
$ | 404 | $ | 176 | $ | 1,540 | ||||||||
Income from Continuing Operations Per Share: |
||||||||||||||
Basic |
$ | 0.69 | $ | 0.29 | $ | 2.85 | ||||||||
Diluted |
$ | 0.67 | $ | 0.29 | $ | 2.77 | ||||||||
Net Income
Per Share: |
||||||||||||||
Basic |
$ | 0.75 | $ | 0.33 | $ | 2.89 | ||||||||
Diluted |
$ | 0.74 | $ | 0.33 | $ | 2.81 | ||||||||
Average
Number of Shares Outstanding: |
||||||||||||||
Basic |
538 | 526 | 533 | |||||||||||
Diluted |
543 | 535 | 548 |
Twelve
Months Ended
|
Components
of Revenue Change
|
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December
31, |
|||||||||||||||||||||||||
(In
millions, except percentage figures)
|
|
2005
|
|
2004
|
|
%
Change GAAP Revenue |
|
Currency Impact |
|
Acquisitions/ Dispositions Impact |
|
Underlying Revenue(a) |
|||||||||||||
Risk
and Insurance Services |
|||||||||||||||||||||||||
Insurance
Services (a) |
$ | 4,567 | $ | 5,166 | (12 | )% | 1 | % | | (13 | )% | ||||||||||||||
Reinsurance
Services |
836 | 859 | (3 | )% | 1 | % | | (4 | )% | ||||||||||||||||
Risk Capital Holdings (b) |
189 | 180 | 5 | % | | (8 | )% | 13 | % | ||||||||||||||||
Total Risk and Insurance Services (c) |
5,592 | 6,205 | (10 | )% | 1 | % | | (11 | )% | ||||||||||||||||
Risk Consulting & Technology (c) |
946 | 405 | 133 | % | (1 | )% | 113 | % | 21 | % | |||||||||||||||
Consulting |
|||||||||||||||||||||||||
Human
Resource Consulting (c) |
2,708 | 2,704 | | 1 | % | | (1 | )% | |||||||||||||||||
Specialty Consulting |
909 | 774 | 17 | % | | 1 | % | 16 | % | ||||||||||||||||
|
3,617 | 3,478 | 4 | % | 1 | % | | 3 | % | ||||||||||||||||
Reimbursed Expenses |
185 | 159 | |||||||||||||||||||||||
Total Consulting |
3,802 | 3,637 | 4 | % | 1 | % | | 3 | % | ||||||||||||||||
Investment Management |
1,506 | 1,710 | (12 | )% | | | (12 | )% | |||||||||||||||||
Total
Operating Segments (c) |
$ | 11,846 | $ | 11,957 | (1 | )% | 1 | % | 4 | % | (6 | )% | |||||||||||||
Corporate/Eliminations |
(194 | ) | (196 | ) | |||||||||||||||||||||
Total (c) |
$ | 11,652 | $ | 11,761 | (1 | )% | 1 | % | 4 | % | (6 | )% |
Twelve
Months Ended
|
Components
of Revenue Change
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December
31, |
||||||||||||||||||||
(In
millions, except percentage figures)
|
|
2004
|
|
2003
|
|
%
Change GAAP Revenue |
|
Underlying Revenue(a) |
|
Currency/ Acquisitions Impact |
||||||||||
Risk
and Insurance Services (c) |
$ | 6,205 | $ | 6,133 | 1 | % | (3 | )% | 4 | % | ||||||||||
Risk
Consulting & Technology (c) |
405 | 19 | 100 | +% | (18 | )% | 100+% | |||||||||||||
Consulting
(c) |
3,637 | 3,290 | 11 | % | 3 | % | 8 | % | ||||||||||||
Investment Management |
1,710 | 1,955 | (13 | )% | (13 | )% | | |||||||||||||
Total
Operating Segments |
$ | 11,957 | $ | 11,397 | 5 | % | (3 | )% | 8 | % | ||||||||||
Corporate/Eliminations |
(196 | ) | (197 | ) | ||||||||||||||||
Total Revenue (c) |
$ | 11,761 | $ | 11,200 | 5 | % | (3 | )% | 8 | % |
(a) |
Underlying revenue measures the change in revenue before the impact of acquisitions and dispositions, using constant currency exchange rates. Underlying revenue for Insurance Services in 2005 decreased 13% in the twelve months, including a 7% decline related to market services agreements, and for the Risk and Insurance Services segment underlying revenue decreased 11% in the twelve months, including a 6% decline related to market services agreements. |
(b) |
Risk Capital Holdings owns MMCs investments in insurance and financial services firms such as Ace Ltd., XL Capital Ltd., and Axis Capital Holdings Ltd., as well as the Trident funds. |
(c) |
Certain reclassifications have been made to prior year amounts to conform with current presentation. The data presented above excludes the results of the U.S. wholesale broking and claims management businesses, which are classified as discontinued operations. |
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue |
$ | 5,592 | $ | 6,205 | $ | 6,133 | ||||||||
Expense |
5,287 | 6,121 | 4,526 | |||||||||||
Operating Income |
$ | 305 | $ | 84 | $ | 1,607 | ||||||||
Operating Income Margin |
5.5 | % | 1.4 | % | 26.2 | % |
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue |
$ | 946 | $ | 405 | $ | 19 | ||||||||
Expense |
822 | 357 | 27 | |||||||||||
Operating Income |
$ | 124 | $ | 48 | $ | (8 | ) | |||||||
Operating Income Margin |
13.1 | % | 11.9 | % | (42.1 | )% |
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue |
$ | 3,802 | $ | 3,637 | $ | 3,290 | ||||||||
Expense |
3,351 | 3,228 | 2,829 | |||||||||||
Operating Income |
$ | 451 | $ | 409 | $ | 461 | ||||||||
Operating Income Margin |
11.9 | % | 11.2 | % | 14.0 | % |
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue |
$ | 1,506 | $ | 1,710 | $ | 1,955 | ||||||||
Expense |
1,243 | 1,612 | 1,452 | |||||||||||
Operating Income |
$ | 263 | $ | 98 | $ | 503 | ||||||||
Operating Income Margin |
17.5 | % | 5.7 | % | 25.7 | % |
(In billions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mutual
Funds: |
||||||||||||||
Growth
Equity |
$ | 31 | $ | 38 | $ | 46 | ||||||||
Value
Equity |
37 | 41 | 43 | |||||||||||
Blend
Equity |
26 | 28 | 32 | |||||||||||
Fixed Income |
32 | 36 | 42 | |||||||||||
126 | 143 | 163 | ||||||||||||
Institutional: |
||||||||||||||
Equity |
34 | 40 | 51 | |||||||||||
Fixed Income |
29 | 30 | 26 | |||||||||||
63 | 70 | 77 | ||||||||||||
Year-end Assets |
$ | 189 | $ | 213 | $ | 240 | ||||||||
Assets from Non-US Investors |
$ | 32 | $ | 38 | $ | 39 | ||||||||
Average Assets |
$ | 196 | $ | 217 | $ | 258 | ||||||||
Components of year-to-date change in ending assets under management: |
||||||||||||||
Net Redemptions including Dividends Reinvested |
$ | (31 | ) | $ | (51 | ) | $ | (61 | ) | |||||
Impact of PanAgora Acquisition |
$ | | $ | 8 | $ | | ||||||||
Impact of Market/Performance |
$ | 7 | $ | 16 | $ | 50 |
$26 million, including $10 million related to a start-up hedge fund management business at MMC that was subsequently discontinued. Other significant items recorded in 2004 were severance of $57 million incurred prior to the fourth quarter restructuring, as well as incremental costs related to regulatory issues and repositioning Putnam, including legal and audit costs of $45 million and communications costs of $16 million. In 2004, Putnam discontinued the practice of directing brokerage commissions and virtually eliminated the use of soft dollars, causing expenses to increase by approximately $40 million. These increases were partially offset by a decrease in amortization expense for prepaid dealer commissions and a $25 million credit to compensation expense associated with the settlement with Putnams former chief executive officer.
(In millions of dollars) |
|
Costs Incurred |
|
Savings Realized |
|
Incremental Savings Expected |
|
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2004 |
|
2005 |
|
2005 |
|
2006 |
||||||||||||
2004
Plan |
$ | 337 | $ | 3 | $ | 400 | | ||||||||||||
2005 Plan |
| 310 | 160 | 215 |
Payment due by Period |
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Contractual Obligations |
|
Total |
|
Within 1 Year |
|
13 Years |
|
45 Years |
|
After 5 Years |
|||||||||||||
Bank
Borrowings-International |
$ | 597 | $ | 429 | $ | 168 | $ | | $ | | |||||||||||||
Current
portion of long-term debt |
69 | 69 | | | | ||||||||||||||||||
Long-term
debt |
4,874 | | 1,271 | 965 | 2,638 | ||||||||||||||||||
NYAG/NYSID
settlement |
595 | 255 | 340 | | | ||||||||||||||||||
Net operating
leases |
3,349 | 466 | 763 | 542 | 1,578 | ||||||||||||||||||
Service
agreements |
181 | 65 | 70 | 44 | 2 | ||||||||||||||||||
Other long-term obligations |
66 | 38 | 28 | | | ||||||||||||||||||
Total |
$ | 9,731 | $ | 1,322 | $ | 2,640 | $ | 1,551 | $ | 4,218 |
(In millions of dollars) |
|
December 31, 2005 |
||||
---|---|---|---|---|---|---|
Cash and cash
equivalents invested in certificates of deposit and time deposits (Note 1) |
$ | 2,020 | ||||
Fiduciary
cash and investments (Note 1) |
$ | 3,795 | ||||
Variable rate debt outstanding (Note 11) |
$ | 1,076 |
0.5 Percentage Point Increase |
|
0.5 Percentage Point Decrease |
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In millions of dollars) |
|
U.S. |
|
U.K. |
|
U.S. |
|
U.K. |
|||||||||||
Assumed Rate
of Return |
$ | (13.2 | ) | $ | (21.1 | ) | $ | 13.2 | $ | 21.1 | |||||||||
Discount Rate |
$ | (29.1 | ) | $ | (54.3 | ) | $ | 31.2 | $ | 57.3 |
Item
7A. |
Quantitative and Qualitative Disclosures About Market Risk. |
Item
8. |
Financial Statements and Supplementary Data. |
For the Years Ended December 31, (In millions except per share figures) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue |
$ | 11,652 | $ | 11,761 | $ | 11,200 | ||||||||
Income Before
Income Taxes and Minority Interest |
$ | 571 | $ | 402 | $ | 2,287 | ||||||||
Income From
Continuing Operations |
$ | 369 | $ | 154 | $ | 1,516 | ||||||||
Net
Income |
$ | 404 | $ | 176 | $ | 1,540 | ||||||||
Stockholders Equity |
$ | 5,360 | $ | 5,056 | $ | 5,451 | ||||||||
Diluted
Income Per Share: |
||||||||||||||
Income From
Continuing Operations |
$ | 0.67 | $ | 0.29 | $ | 2.77 | ||||||||
Net
Income |
$ | 0.74 | $ | 0.33 | $ | 2.81 | ||||||||
Dividends
Paid Per Share |
$ | 0.68 | $ | 1.30 | $ | 1.18 | ||||||||
Year-end Stock Price |
$ | 31.76 | $ | 32.90 | $ | 47.89 |
For the Years Ended December 31, (In millions except per share figures) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue: |
||||||||||||||
Service
revenue |
$ | 11,469 | $ | 11,561 | $ | 11,100 | ||||||||
Investment income (loss) |
183 | 200 | 100 | |||||||||||
Operating revenue |
11,652 | 11,761 | 11,200 | |||||||||||
Expense: |
||||||||||||||
Compensation
and benefits |
6,945 | 6,706 | 5,710 | |||||||||||
Other
operating expenses |
3,811 | 3,486 | 3,032 | |||||||||||
Settlement and other costs |
40 | 969 | 10 | |||||||||||
Operating expenses |
10,796 | 11,161 | 8,752 | |||||||||||
Operating
income |
856 | 600 | 2,448 | |||||||||||
Interest
income |
47 | 21 | 24 | |||||||||||
Interest expense |
(332 | ) | (219 | ) | (185 | ) | ||||||||
Income before
income taxes and minority interest |
571 | 402 | 2,287 | |||||||||||
Income
taxes |
192 | 240 | 751 | |||||||||||
Minority interest, net of tax |
10 | 8 | 20 | |||||||||||
Income from
continuing operations |
369 | 154 | 1,516 | |||||||||||
Discontinued operations, net of tax |
35 | 22 | 24 | |||||||||||
Net income |
$ | 404 | $ | 176 | $ | 1,540 | ||||||||
Basic net
income per share Continuing operations |
$ | 0.69 | $ | 0.29 | $ | 2.85 | ||||||||
Net income |
$ | 0.75 | $ | 0.33 | $ | 2.89 | ||||||||
Diluted net
income per share Continuing operations |
$ | 0.67 | $ | 0.29 | $ | 2.77 | ||||||||
Net income |
$ | 0.74 | $ | 0.33 | $ | 2.81 | ||||||||
Average
number of shares outstanding Basic |
538 | 526 | 533 | |||||||||||
Diluted |
543 | 535 | 548 |
December 31, (In millions of dollars) |
|
2005 |
|
2004 |
||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS |
||||||||||
Current
assets: |
||||||||||
Cash and cash equivalents |
$ | 2,020 | $ | 1,370 | ||||||
Receivables |
||||||||||
Commissions
and fees |
2,407 | 2,475 | ||||||||
Advanced
premiums and claims |
117 | 102 | ||||||||
Other |
363 | 424 | ||||||||
2,887 | 3,001 | |||||||||
Less allowance for doubtful accounts and cancellations |
(157 | ) | (142 | ) | ||||||
Net receivables |
2,730 | 2,859 | ||||||||
Assets of
discontinued operations |
153 | 173 | ||||||||
Other current assets |
359 | 597 | ||||||||
Total current
assets |
5,262 | 4,999 | ||||||||
Goodwill and
intangible assets |
7,773 | 8,055 | ||||||||
Fixed assets,
net |
1,178 | 1,363 | ||||||||
Long-term
investments |
277 | 558 | ||||||||
Prepaid
pension |
1,596 | 1,394 | ||||||||
Other assets |
1,806 | 2,129 | ||||||||
$ | 17,892 | $ | 18,498 | |||||||
LIABILITIES
AND STOCKHOLDERS EQUITY |
||||||||||
Current
liabilities: |
||||||||||
Short-term
debt |
$ | 498 | $ | 636 | ||||||
Accounts
payable and accrued liabilities |
1,733 | 1,818 | ||||||||
Regulatory
settlements current portion |
333 | 394 | ||||||||
Accrued
compensation and employee benefits |
1,413 | 1,568 | ||||||||
Accrued
income taxes |
192 | 281 | ||||||||
Dividends
payable |
93 | | ||||||||
Liabilities of discontinued operations |
89 | 46 | ||||||||
Total current liabilities |
4,351 | 4,743 | ||||||||
Fiduciary
liabilities |
3,795 | 4,111 | ||||||||
Less cash and investments held in a fiduciary capacity |
(3,795 | ) | (4,111 | ) | ||||||
| | |||||||||
Long-term
debt |
5,044 | 4,691 | ||||||||
Regulatory
settlements |
348 | 595 | ||||||||
Pension,
postretirement and postemployment benefits |
1,180 | 1,326 | ||||||||
Other liabilities |
1,609 | 2,087 | ||||||||
Commitments and contingencies |
||||||||||
Stockholders equity: |
||||||||||
Preferred
stock, $1 par value, authorized 6,000,000 shares, none issued |
| | ||||||||
Common stock,
$1 par value, authorized 1,600,000,000 shares, issued 560,641,640 shares in 2005 and 2004 |
561 | 561 | ||||||||
Additional
paid-in capital |
1,143 | 1,316 | ||||||||
Retained
earnings |
4,989 | 5,044 | ||||||||
Accumulated other comprehensive loss |
(756 | ) | (370 | ) | ||||||
5,937 | 6,551 | |||||||||
Less treasury shares at cost, 15,057,704 shares in 2005 and 33,831,782 shares in 2004 |
(577 | ) | (1,495 | ) | ||||||
Total stockholders equity |
5,360 | 5,056 | ||||||||
$ | 17,892 | $ | 18,498 |
For the Years Ended December 31, (In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating cash
flows: |
||||||||||||||
Net
income |
$ | 404 | $ | 176 | $ | 1,540 | ||||||||
Adjustments
to reconcile net income to cash generated from operations: |
||||||||||||||
Depreciation
of fixed assets and capitalized software |
391 | 392 | 349 | |||||||||||
Amortization
of intangible assets |
99 | 64 | 42 | |||||||||||
Provision
(benefit) for deferred income taxes |
36 | (71 | ) | 90 | ||||||||||
(Gains)
losses on investments |
(183 | ) | (200 | ) | (100 | ) | ||||||||
Disposition
or write-offs of assets |
(19 | ) | | | ||||||||||
Accrual of
stock-based compensation, resulting from adoption of SFAS 123(R) |
64 | | | |||||||||||
Changes in
assets and liabilities: |
||||||||||||||
Net
receivables |
57 | (107 | ) | (199 | ) | |||||||||
Other current
assets |
122 | 60 | (34 | ) | ||||||||||
Other
assets |
(229 | ) | 93 | (289 | ) | |||||||||
Accounts
payable and accrued liabilities |
(35 | ) | 858 | 23 | ||||||||||
Accrued
compensation and employee benefits |
(167 | ) | 328 | 125 | ||||||||||
Accrued
income taxes |
4 | (39 | ) | 85 | ||||||||||
Other
liabilities |
(72 | ) | 446 | 135 | ||||||||||
Effect of exchange rate changes |
(73 | ) | 69 | 100 | ||||||||||
Net cash generated from operations |
399 | 2,069 | 1,867 | |||||||||||
Financing cash
flows: |
||||||||||||||
Net decrease
in commercial paper |
(129 | ) | (311 | ) | (817 | ) | ||||||||
Proceeds from
issuance of debt |
2,341 | 4,265 | 800 | |||||||||||
Other
repayments of debt |
(1,990 | ) | (2,003 | ) | (55 | ) | ||||||||
Purchase of
treasury shares |
| (536 | ) | (1,195 | ) | |||||||||
Issuance of
common stock |
269 | 456 | 573 | |||||||||||
Dividends paid |
(363 | ) | (681 | ) | (631 | ) | ||||||||
Net cash provided by (used for) financing activities |
128 | 1,190 | (1,325 | ) | ||||||||||
Investing cash
flows: |
||||||||||||||
Capital
expenditures |
(345 | ) | (376 | ) | (436 | ) | ||||||||
Net sales of
long-term investments |
318 | 120 | 75 | |||||||||||
Proceeds from
sales related to fixed assets and capitalized software |
46 | 23 | 8 | |||||||||||
Dispositions |
156 | | | |||||||||||
Acquisitions |
(74 | ) | (2,364 | ) | (178 | ) | ||||||||
Other, net |
52 | 41 | 61 | |||||||||||
Net cash provided by (used for) investing activities |
153 | (2,556 | ) | (470 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents |
(43 | ) | 28 | 47 | ||||||||||
Increase in cash
and cash equivalents |
637 | 731 | 119 | |||||||||||
Cash and cash equivalents at beginning of year |
1,396 | 665 | 546 | |||||||||||
Cash and cash equivalents at end of year |
2,033 | 1,396 | 665 | |||||||||||
Cash and cash equivalents reported as discontinued operations |
(13 | ) | (26 | ) | (14 | ) | ||||||||
Cash and cash equivalents continuing operations |
$ | 2,020 | $ | 1,370 | $ | 651 |
For the Years Ended December 31, (In millions of dollars, except per share figures) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
COMMON
STOCK |
||||||||||||||
Balance,
beginning of year |
$ | 561 | $ | 561 | $ | 561 | ||||||||
Issuance of shares under stock compensation plans and employee stock purchase plans |
| | | |||||||||||
Balance, end of year |
$ | 561 | $ | 561 | $ | 561 | ||||||||
ADDITIONAL
PAID-IN CAPITAL |
||||||||||||||
Balance,
beginning of year |
$ | 1,316 | $ | 1,301 | $ | 1,426 | ||||||||
Acquisitions |
(15 | ) | 1 | 2 | ||||||||||
SFAS 123R
implementation adjustment |
135 | | | |||||||||||
SFAS 123R
periodic compensation costs |
67 | | | |||||||||||
Issuance of
shares to MMC retirement plan |
(160 | ) | | | ||||||||||
Issuance of shares under stock compensation plans and employee stock purchase plans and related tax
benefits |
(200 | ) | 14 | (127 | ) | |||||||||
Balance, end of year |
$ | 1,143 | $ | 1,316 | $ | 1,301 | ||||||||
RETAINED
EARNINGS |
||||||||||||||
Balance,
beginning of year |
$ | 5,044 | $ | 5,386 | $ | 4,490 | ||||||||
Net income
(a) |
404 | 176 | 1,540 | |||||||||||
Dividend
equivalents paid |
(2 | ) | | | ||||||||||
Dividends declared (per share amounts: $.85 in 2005, $.99 in 2004 and $1.21 in 2003) |
(457 | ) | (518 | ) | (644 | ) | ||||||||
Balance, end of year |
$ | 4,989 | $ | 5,044 | $ | 5,386 | ||||||||
ACCUMULATED
OTHER COMPREHENSIVE LOSS |
||||||||||||||
Balance,
beginning of year |
$ | (370 | ) | $ | (279 | ) | $ | (452 | ) | |||||
Foreign
currency translation adjustments (b) |
(271 | ) | 234 | 302 | ||||||||||
Unrealized
investment holding (losses) gains, net of reclassification adjustments (c) |
(85 | ) | (58 | ) | 76 | |||||||||
Minimum
pension liability adjustment (d) |
(30 | ) | (266 | ) | (201 | ) | ||||||||
Net deferred loss on cash flow hedges (e) |
| (1 | ) | (4 | ) | |||||||||
Balance, end of year |
$ | (756 | ) | $ | (370 | ) | $ | (279 | ) | |||||
TREASURY
SHARES |
||||||||||||||
Balance,
beginning of year |
$ | (1,495 | ) | $ | (1,518 | ) | $ | (1,007 | ) | |||||
Purchase of
treasury shares |
| (524 | ) | (1,209 | ) | |||||||||
Acquisitions |
82 | 7 | 16 | |||||||||||
Issuance of
shares to MMC retirement plan |
365 | | | |||||||||||
Issuance of shares under stock compensation plans and employee stock purchase plans |
471 | 540 | 682 | |||||||||||
Balance, end of year |
$ | (577 | ) | $ | (1,495 | ) | $ | (1,518 | ) | |||||
TOTAL STOCKHOLDERS EQUITY |
$ | 5,360 | $ | 5,056 | $ | 5,451 | ||||||||
TOTAL COMPREHENSIVE INCOME (a+b+c+d+e) |
$ | 18 | $ | 85 | $ | 1,713 |
1. |
Summary of Significant Accounting Policies |
December 31, (In millions of dollars) |
|
2005 |
|
2004 |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Furniture and
equipment |
$ | 1,557 | $ | 1,612 | ||||||
Land and
buildings |
457 | 457 | ||||||||
Leasehold and building improvements |
888 | 897 | ||||||||
2,902 | 2,966 | |||||||||
Less accumulated depreciation and amortization |
(1,724 | ) | (1,603 | ) | ||||||
$ | 1,178 | $ | 1,363 |
For the Years Ended December 31, (In millions) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Income from
continuing operations |
$ | 369 | $ | 154 | $ | 1,516 | ||||||||
Less:Potential minority interest expense associated with Putnam Class B Common Shares |
(5 | ) | | (1 | ) | |||||||||
Add: Dividend equivalent expense related to common stock equivalents |
1 | 2 | 2 | |||||||||||
Income from continuing operations for diluted earnings per share |
$ | 365 | $ | 156 | $ | 1,517 | ||||||||
Basic weighted
average common shares outstanding |
538 | 526 | 533 | |||||||||||
Dilutive effect of potentially issuable common shares |
5 | 9 | 15 | |||||||||||
Diluted weighted average common shares outstanding |
543 | 535 | 548 | |||||||||||
Average stock price used to calculate common stock equivalents |
$ | 29.65 | $ | 42.12 | $ | 46.99 |
2. |
Supplemental Disclosures |
For the Years Ended December 31, (In millions of dollars) |
2005 |
2004 |
2003 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Purchase
acquisitions: |
||||||||||||||
Assets
acquired, excluding cash |
$ | 68 | $ | 2,353 | $ | 408 | ||||||||
Liabilities
assumed |
| (17 | ) | (9 | ) | |||||||||
Issuance of
debt and other obligations |
(8 | ) | (33 | ) | (115 | ) | ||||||||
Deferred
purchase consideration |
80 | 61 | | |||||||||||
Shares issuable |
(66 | ) | | (106 | ) | |||||||||
Net cash outflow for acquisitions |
$ | 74 | $ | 2,364 | $ | 178 | ||||||||
Interest
paid |
$ | 307 | $ | 198 | $ | 172 | ||||||||
Income taxes paid |
$ | 156 | $ | 383 | $ | 542 |
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at
beginning of year |
$ | 142 | $ | 115 | $ | 122 | ||||||||
Provision
charged to operations |
49 | 30 | 18 | |||||||||||
Accounts
written-off, net of recoveries |
(25 | ) | (10 | ) | (35 | ) | ||||||||
Effect of exchange rate changes |
(9 | ) | 7 | 10 | ||||||||||
Balance at end of year |
$ | 157 | $ | 142 | $ | 115 |
3. |
Other Comprehensive Income (Loss) |
For
the Years Ended December 31, (In millions of dollars) |
|
2005
|
|
2004
|
|
2003
|
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Foreign
currency translation adjustments |
$ | (271 | ) | $ | 234 | $ | 302 | ||||||
Unrealized
investment holding gains, net of income tax liability of $10, $3 and $54
in 2005, 2004 and 2003, respectively |
18 | 8 | 98 | ||||||||||
Less: | Reclassification adjustment for realized gains included in net income,
net of income tax liability of $55, $36 and $12 in 2005, 2004 and 2003,
respectively |
(103 | ) | (66 | ) | (22 | ) | ||||||
Minimum
pension liability adjustment, net of income tax benefit of $3 in 2005,
$123 in 2004 and $77 in 2003 |
(30 | ) | (266 | ) | (201 | ) | |||||||
Deferred loss on cash flow hedges, net of income
tax benefit of $0, $(1) and $(2) in 2005, 2004 and 2003, respectively |
| (1 | ) | (4 | ) | ||||||||
|
$ | (386 | ) | $ | (91 | ) | $ | 173 |
December 31, (In millions of dollars) |
|
2005 |
|
2004 |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Foreign
currency translation adjustments |
$ | (27 | ) | $ | 244 | |||||
Net
unrealized investment gains |
53 | 138 | ||||||||
Minimum pension liability adjustment |
(782 | ) | (752 | ) | ||||||
$ | (756 | ) | $ | (370 | ) |
4. |
Acquisitions and Dispositions |
5. |
Discontinued Operations |
For the Years Ended December 31, (In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total Revenue |
$ | 457 | $ | 399 | $ | 344 | ||||||||
Income before
provision for income tax |
$ | 41 | $ | 41 | $ | 43 | ||||||||
Provision for income tax |
20 | 19 | 19 | |||||||||||
Income from discontinued operations, net of tax |
21 | 22 | 24 | |||||||||||
Gain on
disposal of discontinued operations |
55 | | | |||||||||||
Provision for income tax |
41 | | | |||||||||||
Gain on disposal of discontinued operations, net of tax |
14 | | | |||||||||||
Discontinued operations, net of tax |
$ | 35 | $ | 22 | $ | 24 |
For the Years Ended December 31, (In millions of dollars) |
|
2005 |
|
2004 |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets of
discontinued operations: |
||||||||||
Current
assets |
$ | 40 | $ | 62 | ||||||
Fixed assets,
net |
31 | 24 | ||||||||
Goodwill and
intangible assets |
78 | 83 | ||||||||
Other assets |
4 | 4 | ||||||||
Total assets of discontinued operations |
$ | 153 | $ | 173 | ||||||
Liabilities of discontinued operations |
$ | 89 | $ | 46 |
6. |
Goodwill and Other Intangibles |
(In millions of dollars) |
|
|||||
---|---|---|---|---|---|---|
Balance as of
January 1, 2005 |
$ | 7,459 | ||||
Goodwill
acquired |
45 | |||||
Disposals |
(95 | ) | ||||
Transfer to
identified intangible asset (purchase accounting adjustment) |
(38 | ) | ||||
Other adjustments (a) |
(125 | ) | ||||
Balance as of December 31, 2005 |
$ | 7,246 |
(a) |
Primarily includes foreign exchange. |
2005
|
|
2004
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December
31, (In millions of dollars) |
|
Gross Cost |
|
Accumulated Amortization |
|
Net Carrying Amount |
|
Gross Cost |
|
Accumulated Amortization |
|
Net Carrying Amount |
||||||||||||
Customer
and marketing related |
$ | 638 | $ | 191 | $ | 447 | $ | 613 | $ | 115 | $ | 498 | ||||||||||||
Future revenue streams related to existing private
equity funds |
200 | 125 | 75 | 199 | 108 | 91 | ||||||||||||||||||
Total amortized intangibles |
$ | 838 | $ | 316 | $ | 522 | $ | 812 | $ | 223 | $ | 589 |
For the Years Ending December 31, (In millions of dollars) |
|
Estimated Expense |
||||
---|---|---|---|---|---|---|
2006 |
$ | 92 | ||||
2007 |
$ | 74 | ||||
2008 |
$ | 64 | ||||
2009 |
$ | 56 | ||||
2010 |
$ | 41 |
7. |
Income Taxes |
For the Years Ended December 31, (In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Income before income taxes and minority interest: |
||||||||||||||
U.S. |
$ | 142 | $ | (111 | ) | $ | 1,386 | |||||||
Other |
429 | 513 | 901 | |||||||||||
$ | 571 | $ | 402 | $ | 2,287 | |||||||||
Income
taxes: |
||||||||||||||
Current |
||||||||||||||
U.S.
Federal |
$ | (22 | ) | $ | 187 | $ | 419 | |||||||
Other
national governments |
125 | 80 | 159 | |||||||||||
U.S. state and local |
53 | 44 | 83 | |||||||||||
156 | 311 | 661 | ||||||||||||
Deferred |
||||||||||||||
U.S.
Federal |
49 | (118 | ) | 45 | ||||||||||
Other
national governments |
(5 | ) | 67 | 60 | ||||||||||
U.S. state and local |
(8 | ) | (20 | ) | (15 | ) | ||||||||
36 | (71 | ) | 90 | |||||||||||
Total income taxes |
$ | 192 | $ | 240 | $ | 751 |
December 31, (In millions of dollars) |
|
2005 |
|
2004 |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred
tax assets: |
||||||||||
Accrued
expenses not currently deductible (a) |
$ | 793 | $ | 807 | ||||||
Differences
related to non-U.S. operations |
215 | 242 | ||||||||
Net operating
losses (b) |
31 | 9 | ||||||||
Other |
62 | 54 | ||||||||
$ | 1,101 | $ | 1,112 | |||||||
Deferred
tax liabilities: |
||||||||||
Unrealized
investment holding gains |
$ | 29 | $ | 74 | ||||||
Differences
related to non-U.S. operations |
91 | 123 | ||||||||
Depreciation
and amortization |
282 | 277 | ||||||||
Accrued
retirement benefits |
107 | 34 | ||||||||
Other |
24 | 28 | ||||||||
$ | 533 | $ | 536 |
(a) |
Net of valuation allowance of $9 million and $10 million, respectively. |
(b) |
Net of valuation allowance of $68 million and $41 million, respectively. |
Balance
sheet classifications: |
||||||||||
Current
assets |
$ | 153 | $ | 282 | ||||||
Other assets |
$ | 415 | $ | 294 |
For the Years Ended December 31, |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% |
|
% |
|
% |
|||||||||
U.S. Federal
statutory rate |
35.0 | 35.0 | 35.0 | |||||||||||
U.S. state
and local income taxes net of U.S. Federal income tax benefit |
5.1 | 1.6 | 1.9 | |||||||||||
Differences
related to non-U.S. operations |
(5.1 | ) | (8.2 | ) | (4.2 | ) | ||||||||
NYAG lawsuit,
including state taxes |
| 12.9 | | |||||||||||
Putnam
regulatory settlements |
| 19.4 | | |||||||||||
Meals and
entertainment |
1.5 | 2.9 | .5 | |||||||||||
Dividends
paid to employees |
(1.4 | ) | (3.3 | ) | (.6 | ) | ||||||||
Other |
(1.5 | ) | (.9 | ) | .2 | |||||||||
Effective tax rate |
33.6 | 59.4 | 32.8 |
8. |
Retirement Benefits |
Pension Benefits |
Postretirement Benefits |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
||||||||||||
Weighted
average assumptions: |
|||||||||||||||||||
Discount rate
(for expense) |
5.5 | % | 5.8 | % | 5.9 | % | 6.3 | % | |||||||||||
Expected
return on plan assets |
8.4 | % | 8.4 | % | | | |||||||||||||
Rate of
compensation increase (for expense) |
3.6 | % | 3.7 | % | | | |||||||||||||
Discount rate
(for benefit obligation) |
5.1 | % | 5.5 | % | 5.6 | % | 5.9 | % | |||||||||||
Rate of compensation increase (for benefit obligation) |
3.8 | % | 3.6 | % | | |
For the Years Ended December 31, |
Pension Benefits |
Postretirement Benefits |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
|
2005 |
|
2004 |
|
2003 |
|||||||||||||||
Service
cost |
$ | 245 | $ | 232 | $ | 190 | $ | 9 | $ | 11 | $ | 9 | |||||||||||||||
Interest
cost |
472 | 422 | 363 | 18 | 20 | 20 | |||||||||||||||||||||
Expected
return on plan assets |
(640 | ) | (618 | ) | (545 | ) | | | | ||||||||||||||||||
Amortization
of prior service credit |
(41 | ) | (38 | ) | (38 | ) | (3 | ) | (2 | ) | (2 | ) | |||||||||||||||
Amortization
of transition asset |
| (5 | ) | (5 | ) | | | | |||||||||||||||||||
Recognized actuarial loss |
177 | 90 | 26 | 1 | 3 | 5 | |||||||||||||||||||||
Net Periodic Benefit Cost (Income) |
$ | 213 | $ | 83 | $ | (9 | ) | $ | 25 | $ | 32 | $ | 32 |
U.S. Pension Benefits |
U.S. Postretirement Benefits |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, (In millions of dollars) |
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|||||||||||
Change in
benefit obligation: |
|||||||||||||||||||
Benefit
obligation at beginning of year |
$ | 3,013 | $ | 2,538 | $ | 309 | $ | 290 | |||||||||||
Service
cost |
88 | 78 | 8 | 10 | |||||||||||||||
Interest
cost |
176 | 164 | 15 | 17 | |||||||||||||||
Amendments |
(138 | ) | | (92 | ) | | |||||||||||||
Actuarial
loss |
80 | 347 | (27 | ) | 3 | ||||||||||||||
Benefits paid |
(125 | ) | (114 | ) | (19 | ) | (11 | ) | |||||||||||
Benefit obligation at end of year |
$ | 3,094 | $ | 3,013 | $ | 194 | $ | 309 | |||||||||||
Change in
plan assets: |
|||||||||||||||||||
Fair value of
plan assets at beginning of year |
$ | 2,635 | $ | 2,407 | $ | | $ | | |||||||||||
Actual return
on plan assets |
276 | 298 | | | |||||||||||||||
Employer
contributions |
229 | 44 | 19 | 11 | |||||||||||||||
Benefits paid |
(125 | ) | (114 | ) | (19 | ) | (11 | ) | |||||||||||
Fair value of plan assets at end of year |
$ | 3,015 | $ | 2,635 | $ | | $ | | |||||||||||
Funded
status |
$ | (79 | ) | $ | (378 | ) | $ | (194 | ) | $ | (309 | ) | |||||||
Unrecognized
net actuarial loss |
858 | 899 | 38 | 66 | |||||||||||||||
Unrecognized
prior service credit |
(282 | ) | (185 | ) | (93 | ) | (5 | ) | |||||||||||
Unrecognized transition asset |
| | | | |||||||||||||||
Net asset (liability) recognized |
$ | 497 | $ | 336 | $ | (249 | ) | $ | (248 | ) | |||||||||
Amounts
recognized in the Consolidated Balance sheets consist of: |
|||||||||||||||||||
Prepaid
benefit cost |
$ | 746 | $ | 580 | $ | | $ | | |||||||||||
Accrued
benefit liability |
(314 | ) | (316 | ) | (249 | ) | (248 | ) | |||||||||||
Accumulated other comprehensive loss |
65 | 72 | | | |||||||||||||||
Net asset (liability) recognized |
$ | 497 | $ | 336 | $ | (249 | ) | $ | (248 | ) | |||||||||
Accumulated benefit obligation at December 31 |
$ | 3,021 | $ | 2,846 | $ | | $ | |
U.S. Pension Benefits |
U.S. Postretirement Benefits |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
||||||||||||
Weighted
average assumptions: |
|||||||||||||||||||
Discount rate
(for expense) |
6.0 | % | 6.4 | % | 6.0 | % | 6.4 | % | |||||||||||
Expected
return on plan assets |
8.75 | % | 8.75 | % | | ||||||||||||||
Rate of
compensation increase (for expense) |
3.0 | % | 3.15 | % | | ||||||||||||||
Discount rate
(for benefit obligation) |
5.9 | % | 6.0 | % | 5.9 | % | 6.0 | % | |||||||||||
Rate of compensation increase (for benefit obligation) |
3.4 | % | 2.85 | % | |
For the Years Ended December 31, |
U.S. Pension Benefits |
U.S. Postretirement Benefits |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
|
2005 |
|
2004 |
|
2003 |
|||||||||||||||
Service
cost |
$ | 88 | $ | 78 | $ | 66 | $ | 8 | $ | 10 | $ | 8 | |||||||||||||||
Interest
cost |
176 | 164 | 153 | 15 | 17 | 17 | |||||||||||||||||||||
Expected
return on plan assets |
(233 | ) | (230 | ) | (228 | ) | | | | ||||||||||||||||||
Amortization
of prior service credit |
(40 | ) | (38 | ) | (38 | ) | (3 | ) | (2 | ) | (2 | ) | |||||||||||||||
Amortization
of transition asset |
| (5 | ) | (5 | ) | | | | |||||||||||||||||||
Recognized actuarial loss |
78 | 46 | 18 | 1 | 3 | 5 | |||||||||||||||||||||
Net Periodic Benefit Cost (Income) |
$ | 69 | $ | 15 | $ | (34 | ) | $ | 21 | $ | 28 | $ | 28 | ||||||||||||||
Curtailment (Gain)/loss |
| | | (1 | ) | | | ||||||||||||||||||||
Total Expense |
$ | 69 | $ | 15 | $ | (34 | ) | $ | 20 | $ | 28 | $ | 28 |
(In millions of dollars) |
|
1 Percentage Point Increase |
|
1 Percentage Point Decrease |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Effect on
total of service and interest cost components |
$ | 4 | $ | (3 | ) | |||||
Effect on postretirement benefit obligation |
$ | 2 | $ | (8 | ) |
December 31, |
Non-U.S. Pension Benefits |
Non-U.S. Postretirement Benefits |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In millions of dollars) |
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|||||||||||
Change in
benefit obligation: |
|||||||||||||||||||
Benefit
obligation at beginning of year |
$ | 5,936 | $ | 4,666 | $ | 62 | $ | 55 | |||||||||||
Service
cost |
157 | 154 | 1 | 1 | |||||||||||||||
Interest
cost |
296 | 258 | 3 | 3 | |||||||||||||||
Employee
contributions |
37 | 36 | | | |||||||||||||||
Actuarial
loss (gain) |
648 | 591 | 9 | 1 | |||||||||||||||
Effect of
settlement |
(14 | ) | (11 | ) | | | |||||||||||||
Effect of
Curtailment |
(40 | ) | | | | ||||||||||||||
Special
termination benefits |
17 | 6 | | | |||||||||||||||
Benefits
paid |
(210 | ) | (162 | ) | (3 | ) | (3 | ) | |||||||||||
Foreign
currency changes |
(539 | ) | 429 | (2 | ) | 5 | |||||||||||||
Plan amendments |
| (31 | ) | | | ||||||||||||||
Benefit obligation at end of year |
$ | 6,288 | $ | 5,936 | $ | 70 | $ | 62 | |||||||||||
Change in
plan assets: |
|||||||||||||||||||
Fair value of
plan assets at beginning of year |
$ | 4,815 | $ | 3,934 | $ | | $ | | |||||||||||
Actual return
on plan assets |
785 | 427 | | | |||||||||||||||
Effect of
settlement |
(12 | ) | (11 | ) | | | |||||||||||||
Company
contributions |
498 | 239 | 3 | 3 | |||||||||||||||
Employee
contributions |
37 | 36 | | | |||||||||||||||
Benefits
paid |
(210 | ) | (162 | ) | (3 | ) | (3 | ) | |||||||||||
Foreign currency changes |
(443 | ) | 352 | | | ||||||||||||||
Fair value of plan assets at end of year |
$ | 5,470 | $ | 4,815 | $ | | $ | | |||||||||||
Funded
status |
$ | (818 | ) | $ | (1,121 | ) | $ | (70 | ) | $ | (62 | ) | |||||||
Unrecognized
net actuarial loss |
2,251 | 2,322 | 17 | 9 | |||||||||||||||
Unrecognized prior service cost |
(24 | ) | (20 | ) | (2 | ) | (3 | ) | |||||||||||
Net asset (liability) recognized |
$ | 1,409 | $ | 1,181 | $ | (55 | ) | $ | (56 | ) | |||||||||
Amounts
recognized in the Balance Sheet consist of: |
|||||||||||||||||||
Prepaid
benefit cost |
$ | 827 | $ | 800 | $ | | $ | | |||||||||||
Accrued
benefit liability |
(452 | ) | (631 | ) | (55 | ) | (56 | ) | |||||||||||
Intangible
asset |
6 | 9 | | | |||||||||||||||
Accumulated other comprehensive loss |
1,028 | 1,003 | | | |||||||||||||||
Net asset (liability) recognized |
$ | 1,409 | $ | 1,181 | $ | (55 | ) | $ | (56 | ) | |||||||||
Accumulated benefit obligation at December 31 |
$ | 5,680 | $ | 5,261 | $ | | $ | | |||||||||||
Weighted
average assumptions: |
|||||||||||||||||||
Discount rate
(for expense) |
5.3 | % | 5.4 | % | 5.6 | % | 5.7 | % | |||||||||||
Expected
return on plan assets |
8.2 | % | 8.2 | % | | | |||||||||||||
Rate of
compensation increase (for expense) |
4.0 | % | 4.0 | % | | | |||||||||||||
Discount rate
(for benefit obligation) |
4.7 | % | 5.3 | % | 4.8 | % | 5.6 | % | |||||||||||
Rate of compensation increase (for benefit obligation) |
4.0 | % | 4.0 | % | | |
For the Years Ended December 31, |
Non-U.S. Pension Benefits |
Non-U.S. Postretirement Benefits |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
|
2005 |
|
2004 |
|
2003 |
|||||||||||||||
Service
cost |
$ | 157 | $ | 154 | $ | 124 | $ | 1 | $ | 1 | $ | 1 | |||||||||||||||
Interest
cost |
296 | 258 | 210 | 3 | 3 | 3 | |||||||||||||||||||||
Expected
return on plan assets |
(407 | ) | (388 | ) | (317 | ) | | | | ||||||||||||||||||
Amortization
of Prior Service Credit |
(1 | ) | | | | | | ||||||||||||||||||||
Recognized actuarial loss |
99 | 44 | 8 | | | | |||||||||||||||||||||
Net periodic benefit cost |
$ | 144 | $ | 68 | $ | 25 | $ | 4 | $ | 4 | $ | 4 | |||||||||||||||
Settlement
loss |
(1 | ) | 3 | | | | | ||||||||||||||||||||
Special termination benefits |
17 | 6 | 4 | | | | |||||||||||||||||||||
Total expense |
$ | 160 | $ | 77 | $ | 29 | $ | 4 | $ | 4 | $ | 4 |
(In millions of dollars) |
|
1 Percentage Point Increase |
|
1 Percentage Point Decrease |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Effect on
total of service and interest cost components |
$ | 1 | $ | (1 | ) | |||||
Effect on postretirement benefit obligation |
$ | 10 | $ | (8 | ) |
December 31, |
Pension Benefits |
Postretirement Benefits |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In millions of dollars) |
|
U.S. |
|
Non-U.S. |
|
U.S. |
|
Non-U.S. |
|||||||||||
2006 |
$ | 140 | $ | 333 | $ | 11 | $ | 3 | |||||||||||
2007 |
148 | 195 | 11 | 3 | |||||||||||||||
2008 |
155 | 213 | 12 | 3 | |||||||||||||||
2009 |
164 | 237 | 12 | 4 | |||||||||||||||
2010 |
173 | 255 | 12 | 4 | |||||||||||||||
20112015 |
$ | 1,041 | $ | 1,444 | $ | 64 | $ | 21 |
9. |
Stock Benefit Plans |
(In millions of dollars, except per share
figures) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net
Income: |
||||||||||||||
As
reported |
$ | 404 | $ | 176 | $ | 1,540 | ||||||||
Adjustment for fair value method, net of tax |
(69 | ) | (146 | ) | (171 | ) | ||||||||
Pro forma net income |
$ | 335 | $ | 30 | $ | 1,369 | ||||||||
Net Income
Per Share: |
||||||||||||||
Basic: |
||||||||||||||
As
reported |
$ | 0.75 | $ | 0.33 | $ | 2.89 | ||||||||
Pro
forma |
$ | 0.62 | $ | 0.06 | $ | 2.57 | ||||||||
Diluted: |
||||||||||||||
As
reported |
$ | 0.74 | $ | 0.33 | $ | 2.81 | ||||||||
Pro forma |
$ | 0.61 | $ | 0.06 | $ | 2.50 |
2005 |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Pre 7/1/05 |
Post 6/30/05 |
2004 |
2003 |
|||||||||||||||
Risk-free
interest rate |
3.7% |
3.9%4.3 | % | 2.8 | % | 2.75 | % | |||||||||||
Expected life
(in years) |
5.0 |
5.0 | 5.0 | 5.0 | ||||||||||||||
Expected
volatility |
18.5% |
29.0 | % | 19.6 | % | 21.0 | % | |||||||||||
Expected dividend yield |
2.2% |
2.3 | % | 2.3 | % | 2.3 | % |
2005 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Pre 7/1/05 |
Post 6/30/05 |
||||||||||
Risk-free
interest rate |
4.1%4.5% |
4.0%4.1% |
|||||||||
Expected life
(in years) |
6.76.8 |
5.26.5 |
|||||||||
Expected
volatility |
17.9% |
29.0% |
|||||||||
Expected dividend yield |
2.2% |
2.3% |
|
|
Shares |
|
Weighted Average Exercise Price |
|
Weighted Average Remaining Contractual Term |
|
Aggregate Intrinsic Value ($000) |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance
at January 1, 2005 |
86,210,687 | $ | 43.22 | |||||||||||||||
Granted(including 16,300,436 options granted in connection with Exchange Offer) |
33,166,937 | $ | 29.22 | |||||||||||||||
Exercised |
(2,547,092 | ) | $ | 17.51 | ||||||||||||||
Canceled or
exchanged |
(41,762,766 | ) | $ | 47.75 | ||||||||||||||
Forfeited |
(8,772,370 | ) | $ | 43.39 | ||||||||||||||
Expired |
| | ||||||||||||||||
Balance at December 31, 2005 |
66,295,396 | $ | 34.33 | 5.8 years |
$ 134,744 |
|||||||||||||
Options vested or expected to vest at December 31, 2005 |
60,531,432 | $ | 34.27 | 5.6 years |
$ 126,654 |
|||||||||||||
Options exercisable at December 31, 2005 |
32,817,410 | $ | 38.61 | 3.8 years |
$ 58,808 |
|
Shares |
|
Weighted Average Grant Date Fair Value |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Non-vested
balance at January 1, 2005 |
1,749,062 | $ | 42.13 | |||||||
Granted |
385,514 | $ | 28.87 | |||||||
Vested |
(313,300 | ) | $ | 35.57 | ||||||
Forfeited |
(801,221 | ) | $ | 43.91 | ||||||
Non-vested Balance at December 31, 2005 |
1,020,055 | $ | 37.73 |
|
Shares |
|
Weighted Average Grant Date Fair Value |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Non-vested
balance at January 1, 2005 |
1,429,898 | $ | 44.40 | |||||||
Granted |
143,291 | $ | 29.43 | |||||||
Vested |
(709,184 | ) | $ | 44.94 | ||||||
Forfeited |
(80,420 | ) | $ | 48.57 | ||||||
Non-vested Balance at December 31, 2005 |
783,585 | $ | 40.74 |
|
Shares |
|
Weighted Average Grant Date Fair Value |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Non-vested
balance at January 1, 2005 |
6,960,404 | $ | 44.95 | |||||||
Granted |
4,478,514 | $ | 29.88 | |||||||
Vested |
(1,764,891 | ) | $ | 48.43 | ||||||
Forfeited |
(606,156 | ) | $ | 40.27 | ||||||
Non-vested Balance at December 31, 2005 |
9,067,871 | $ | 37.14 |
(In millions of dollars, except per share figures) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Risk-free
interest rate |
4.1 | % | 3.5 | % | 2.5 | % | ||||||||
Expected life
(in years) |
4.5 | 5.0 | 5.0 | |||||||||||
Expected
volatility |
27.9 | % | 26.8 | % | 29.4 | % | ||||||||
Expected dividend yield |
5.0 | % | 5.0 | % | 5.0 | % |
|
Shares |
|
Weighted Average Exercise Price |
|
Weighted Average Remaining Contractual Term |
|
Aggregate Intrinsic Value ($000) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at
January 1, 2005 |
4,869,555 | $ | 61.61 | |||||||||||||||
Granted |
5,138,000 | $ | 28.62 | |||||||||||||||
Exercised |
| | ||||||||||||||||
Canceled |
| | ||||||||||||||||
Forfeited or
exchanged |
(3,182,925 | ) | $ | 63.62 | ||||||||||||||
Expired |
| | ||||||||||||||||
Balance at December 31, 2005 |
6,824,630 | $ | 35.83 |
6.7 years |
$0 |
|||||||||||||
Options vested or expected to vest at December 31, 2005 |
6,268,964 | $ | 36.37 |
6.7 years |
$0 |
|||||||||||||
Options exercisable at December 31, 2005 |
1,487,505 | $ | 57.63 |
4.2 years |
$0 |
|
Shares |
|
Weighted Average Grant Date Fair Value |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Non-vested
balance at January 1, 2005 |
1,929,496 | $ | 41.69 | |||||||
Granted(including 139,388 shares granted in connection with the Offer to Exchange) |
4,111,304 | $ | 28.38 | |||||||
Vested |
(657,353 | ) | $ | 49.21 | ||||||
Forfeited |
(173,401 | ) | $ | 33.96 | ||||||
Non-vested Balance at December 31, 2005 |
5,210,046 | $ | 30.50 |
10. |
Long-term Commitments |
For the Years Ended December 31, (In millions of dollars) |
|
Gross Rental Commitments |
|
Rentals from Subleases |
|
Net Rental Commitments |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2006 |
$ | 499 | $ | 33 | $ | 466 | ||||||||
2007 |
455 | 44 | 411 | |||||||||||
2008 |
396 | 44 | 352 | |||||||||||
2009 |
329 | 41 | 288 | |||||||||||
2010 |
295 | 41 | 254 | |||||||||||
Subsequent years |
1,952 | 374 | 1,578 | |||||||||||
$ | 3,926 | $ | 577 | $ | 3,349 |
For the Years Ending December 31, (In millions of dollars) |
|
Future Minimum Commitments |
||||
---|---|---|---|---|---|---|
2006 |
$ | 65 | ||||
2007 |
38 | |||||
2008 |
32 | |||||
Subsequent years |
46 | |||||
$ | 181 |
11. |
Debt |
(In millions of dollars) |
|
December 31, 2005 |
|
December 31, 2004 |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Short-term: |
||||||||||
Commercial
paper |
$ | | $ | 129 | ||||||
Bank
borrowings U.S. |
| 376 | ||||||||
Bank
borrowings International |
429 | 61 | ||||||||
Current portion of long-term debt |
69 | 70 | ||||||||
$ | 498 | $ | 636 | |||||||
Long-term: |
||||||||||
Term loan
2 year floating rate note due 2006 |
$ | | $ | 1,300 | ||||||
Senior notes
7.125% due 2009 |
399 | 399 | ||||||||
Senior notes
5.375% due 2007 (4.0% effective interest rate) |
508 | 514 | ||||||||
Senior notes
6.25% due 2012 (5.1% effective interest rate) |
264 | 266 | ||||||||
Senior notes
3.625% due 2008 |
249 | 249 | ||||||||
Senior notes
4.850% due 2013 |
249 | 249 | ||||||||
Senior notes
5.875% due 2033 |
295 | 295 | ||||||||
Senior notes
5.375% due 2014 |
647 | 646 | ||||||||
Senior notes
3 year floating rate note due 2007 (4.27% at December 31, 2005) |
499 | 499 | ||||||||
Senior notes
5.15% due 2010 |
547 | | ||||||||
Senior notes
5.75% due 2015 |
745 | | ||||||||
Mortgage
5.70% due 2035 |
473 | | ||||||||
Mortgage
9.8% due 2009 |
| 200 | ||||||||
Notes payable
8.62% due 2005 |
| 65 | ||||||||
Notes payable
7.68% due 2006 |
60 | 61 | ||||||||
Bank
borrowings International |
168 | | ||||||||
Other |
10 | 18 | ||||||||
5,113 | 4,761 | |||||||||
Less current portion |
69 | 70 | ||||||||
$ | 5,044 | $ | 4,691 |
12. |
Financial Instruments |
2005 |
2004 |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, (In millions of dollars) |
|
Carrying Amount |
|
Fair Value |
|
Carrying Amount |
|
Fair Value |
|||||||||||
Cash and cash
equivalents |
$ | 2,020 | $ | 2,020 | $ | 1,370 | $ | 1,370 | |||||||||||
Long-term
investments |
$ | 277 | $ | 277 | $ | 558 | $ | 558 | |||||||||||
Short-term
debt |
$ | 498 | $ | 498 | $ | 636 | $ | 636 | |||||||||||
Long-term debt |
$ | 5,044 | $ | 5,062 | $ | 4,691 | $ | 4,705 |
13. |
Integration and Restructuring Costs |
(In millions of dollars) |
|
Accrued in 2005 |
|
Utilized in 2005 |
|
Remaining Liability at 12/31/05 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Severance and
benefits |
$ | 197 | $ | (128 | ) | $ | 69 | |||||||
Future rent
on non-cancelable leases |
114 | (37 | ) | 77 | ||||||||||
Other exit costs |
(1 | ) | 12 | (a) | 11 | |||||||||
$ | 310 | $ | (153 | ) | $ | 157 |
(a) |
Includes approximately $36 million of payments received on the disposals of small commercial accounts and other dispositions. |
(In millions of dollars) |
|
Accrued in 2004 |
|
Utilized in 2004 |
|
Utilized in 2005 |
|
Additions/ Changes in Estimates 2005 |
|
Remaining Liability at 12/31/05 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Severance and
benefits |
$ | 273 | $ | (48 | ) | $ | (194 | ) | $ | (1 | ) | $ | 30 | |||||||||
Future rent
on non-cancelable leases |
28 | (1 | ) | (17 | ) | (2 | ) | 8 | ||||||||||||||
Lease
termination costs |
18 | | (2 | ) | 1 | 17 | ||||||||||||||||
Other exit costs |
18 | (10 | ) | (8 | ) | 5 | 5 | |||||||||||||||
$ | 337 | $ | (59 | ) | $ | (221 | ) | $ | 3 | $ | 60 |
14. |
Common Stock |
15. |
Stockholder Rights Plan |
16. |
Claims, Lawsuits and Other Contingencies |
a. |
Marsh will accept compensation for its services in placing, renewing, consulting on or servicing any insurance policy only by a specific fee paid by the client; or by a specific percentage commission on premium to be paid by the insurer; or a combination of both. The amount of such compensation must be fully disclosed to, and consented to in writing, by the client prior to the binding of any policy; |
b. |
Marsh must give clients prior notification before retaining interest earned on premiums collected on behalf of insurers; |
c. |
In placing, renewing, consulting on or servicing any insurance policy, Marsh will not accept from or request of any insurer any form of contingent compensation; |
d. |
In placing, renewing, consulting on or servicing any insurance policy, Marsh will not knowingly use wholesalers for the placement, renewal, consultation on or servicing of insurance without the agreement of its client; |
e. |
Prior to the binding of an insurance policy, Marsh will disclose to clients all quotes and indications sought or received from insurers, including the compensation to be received by Marsh in connection with each quote. Marsh also will disclose to clients at year-end Marshs compensation in connection with the clients policy; and |
f. |
Marsh will implement company-wide written standards of conduct relating to compensation and will train relevant employees in a number of subject matters, including business ethics, professional obligations, conflicts of interest, anti-trust and trade practices compliance, and record keeping. |
|
Approximately 21 putative class actions purportedly brought on behalf of policyholders were filed in various federal courts. A number of these federal cases were transferred to the District of New Jersey for coordination or consolidated pretrial proceedings (the MDL Cases). On August 1, 2005, two consolidated amended complaints were filed in the MDL Cases (one on behalf of a purported class of commercial policyholders and the second on behalf of a purported class of employee benefit policyholders), which as against MMC and certain affiliates allege statutory claims for violations of the Racketeering Influenced and Corrupt Organizations Act and federal and state antitrust laws, together with common law claims for breach of fiduciary duty and unjust enrichment. The complaints seek a variety of remedies, including unspecified monetary damages, treble damages, disgorgement, restitution, punitive damages, declaratory and injunctive relief, and attorneys fees and costs. The class periods alleged in the MDL Cases begin on August 26, 1994 and purport to continue to the date of any class certification. On November 29, 2005, MMC and the other defendants moved to dismiss the two consolidated amended complaints. |
|
On January 21, 2005, the State of Connecticut brought an action against Marsh in the Connecticut Superior Court. The State alleged that Marsh violated Connecticuts Unfair Trade Practices Act by accepting $50,000 from an insurer in connection with a placement Marsh made for Connecticuts Department of Administrative Services (the DAS). On September 21, 2005, the State amended its complaint. In addition to its allegations about the DAS transaction, the amended complaint asserts that Marsh violated Connecticuts antitrust and unfair trade practices acts by engaging in bid rigging and other improper conduct that purportedly damaged particular customers and inflated insurance premiums. The State also claims that Marsh improperly accepted contingent commissions and concealed these commissions from its clients. Marsh has moved to stay this action pending the outcome of the MDL Cases. |
|
Four purported class actions on behalf of individuals and entities who purchased or acquired MMCs publicly-traded securities during the purported class periods are pending in the United States District Court for the Southern District of New York. On January 26, 2005, the Court issued an order consolidating these complaints into a single proceeding and appointing co-lead plaintiffs and co-lead counsel to represent the purported class. On April 19, 2005, the co-lead plaintiffs filed a lengthy consolidated complaint. The consolidated complaint names MMC, Marsh, Inc., MMCs independent registered public accounting firm and twenty present and former directors and officers of MMC and certain affiliates as defendants. The purported class period in the consolidated complaint extends from October 14, 1999 to October 13, 2004. |
|
Four individual shareholder actions have been filed against MMC and others in various state courts around the country. MMC and other defendants removed these four actions to federal court. Two actions have since been remanded to state court. One remains pending in federal court, and one has been transferred for inclusion in the consolidated proceeding described immediately above. |
|
A number of shareholder derivative actions are pending against MMCs current and former directors and officers. Five actions in the Court of Chancery of the State of Delaware have been consolidated as a single action (the Delaware Derivative Action). Five actions in the United States District Court for the Southern District of New York have been consolidated as a single action (the Federal Derivative Action). One action is pending in the New York Supreme Court for New York County. These shareholder derivative actions allege, among other things, that current and former directors and officers of MMC breached their fiduciary duties with respect to the alleged misconduct described in the NYAG Lawsuit, are liable to MMC for damages arising from their alleged breaches of fiduciary duty, and must contribute to or indemnify MMC for any damages MMC has suffered. The Delaware Derivative Action is stayed pending a ruling on a motion to dismiss the Southern District of New York securities class action. The derivative action pending in the New York Supreme Court has also been stayed pending resolution of the Federal Derivative Action. |
|
Twenty purported class actions alleging violations of the Employee Retirement Income Security Act of 1974, as amended (ERISA), have been filed in the United States District Court for the Southern District of New York on behalf of participants and beneficiaries of the Marsh & McLennan Companies Stock Investment Plan (the Plan). On February 9, 2005, the Court issued an order consolidating these complaints into a single proceeding and appointing co-lead plaintiffs and lead counsel to represent the purported class. Plaintiffs filed a consolidated class action complaint (the Consolidated Complaint) on June 15, 2005, naming MMC and various current and former employees, officers and directors as defendants. The Consolidated Complaint alleges, among other things, that in view of the purportedly fraudulent bids and the receipt of contingent commissions pursuant to the market service agreements referred to above, the defendants knew or should have known that the investment of the Plans assets in MMC stock was imprudent. The Consolidated Complaint also asserts that certain defendants failed to provide the Plans participants with complete and accurate information about MMC stock, that certain defendants responsible for selecting, removing and monitoring other fiduciaries did not comply with ERISA, and that MMC knowingly participated in other defendants breaches of fiduciary duties. The Consolidated Complaint seeks, among other things, unspecified compensatory damages, injunctive relief and attorneys fees and costs. The amount of Plan assets invested in MMC stock at October 13, 2004 (immediately prior to the announcement of the NYAG Lawsuit) was approximately $1.2 billion. The Consolidated Complaint alleges that during the purported class period, which extends from July 1, 2000 until January 31, 2005, MMC stock fell from $52.22 to $32.50. MMC and the other defendants have filed a motion to dismiss the Consolidated Complaint. |
|
On February 23, 2005, the plaintiffs in a shareholder derivative suit pending in the Delaware Court of Chancery against the directors and officers of American International Group, Inc. (AIG) filed a consolidated complaint which, as subsequently amended, names as additional defendants MMC, Marsh, Inc., Marsh USA Inc., Marsh Global Broking Inc. (collectively, the MMC Corporate Defendants), MMCs former CEO, and five former Marsh employees who have pleaded guilty to certain criminal charges (the former CEO and former employees, together with the MMC Corporate Defendants, the MMC Defendants). This action alleges, among other things, that the MMC Defendants, certain AIG employees and others engaged in conspiracy and common law fraud with respect to the alleged misconduct described in the NYAG Lawsuit, including, but not limited to, illegal bid rigging and kickback schemes, and |
that AIG was harmed thereby. This action further alleges that the MMC Corporate Defendants aided and abetted the current and former directors and officers of AIG in breaching their fiduciary duties to AIG with respect to AIGs participation in the alleged misconduct described in the NYAG Lawsuit and that the MMC Corporate Defendants were unjustly enriched. The consolidated complaint asserts that the MMC Defendants are liable to AIG for damages and also seeks the return of all contingent commission payments made by AIG to the MMC Corporate Defendants. |
|
On May 13, 2005, the plaintiffs in a purported securities fraud class action suit pending in the United States District Court for the Southern District of New York against Axis Capital Holdings Limited (Axis) and certain of its officers filed a consolidated complaint that named MMC, among others, as an additional defendant. This purported class action is on behalf of all persons and entities that purchased or acquired Axiss publicly traded common stock during a purported class period from August 6, 2003 to October 14, 2004. The complaint alleges violations of federal securities laws in connection with defendants purported failure to disclose alleged improper business practices concerning incentive commission payments by Axis to (among others) Marsh Inc. With regard to MMC, the complaint also alleges that various entities and partnerships managed by or associated with MMC Capital Inc. sold Axis common stock to members of the purported class knowing of the alleged inflated valuation of such stock, and seeks damages for alleged violations of federal securities laws. MMC and the other defendants have moved to dismiss this action. |
|
Following the filing of the NYAG Lawsuit, MMC and certain of its subsidiaries received notices of investigations and inquiries, together with requests for documents and information, from attorneys general, departments of insurance and other state and federal governmental entities in a number of jurisdictions (other than New York) that relate to the allegations in the NYAG Lawsuit. As of February 24, 2006, offices of attorneys general in 22 jurisdictions have issued one or more requests for information or subpoenas calling for the production of documents or for witnesses to provide testimony. Subpoenas, letters of inquiry and other information requests have been received from departments of insurance or other state agencies in 38 jurisdictions. MMC and its subsidiaries are cooperating with these requests from regulators. MMC has been contacted by certain of the above state entities indicating that they may file civil actions or otherwise seek additional monetary or other remedies from MMC. In addition, MMC or its subsidiaries may face administrative |
proceedings or other regulatory actions, fines or penalties, including, without limitation, actions to revoke or suspend their insurance broking licenses. |
|
On September 21, 2005, the National Association of Insurance Commissioners (the NAIC) issued a press release indicating that over 30 state insurance regulators working collaboratively through the NAIC had reached a multi-state regulatory settlement with MMC and Marsh Inc. The NAIC settlement agreement reaffirms MMCs commitment, under the Settlement Agreement with NYAG and the NYSID, to establish a no-fault compensation fund for policyholder clients across the United States, and provides for state-by-state enforcement of the business reforms agreed to be implemented pursuant to the Settlement Agreement. The NAIC settlement agreement has been executed by MMC and Marsh Inc. and, as of February 24, 2006, has been adopted by insurance commissioners in thirty-three states, the District of Columbia and Guam. |
|
In 2003 and 2004, Putnam entered into settlements with the Securities and Exchange Commission (the SEC) and the Commonwealth of Massachusetts (the Massachusetts Securities Division) with respect to excessive short-term trading by certain former Putnam employees in shares of the Putnam mutual funds (the Putnam Funds). Under the settlements, Putnam paid in 2004 a total of $110 million ($10 million in restitution and $100 million in civil fines and penalties). Putnam also agreed to undertake a number of remedial compliance actions and to engage an independent assessment consultant (the IAC) to determine the amount of restitution that Putnam would be required to pay to make investors in the Putnam Funds whole for losses attributable to the short-term trading. |
|
In the Spring of 2004, Putnam received document requests and subpoenas from the Massachusetts Securities Division, NYAG, the SEC and the Department of Labor relating to plan expense reimbursement agreements between Putnam and certain multi-employer deferred compensation plans that are Putnam clients, and also relating to Putnams |
relationships with consultants retained by multi-employer deferred compensation plans. At that time, the Massachusetts Securities Division took testimony from a number of Putnam employees relating to these matters. |
|
Commencing in 2004, the Enforcement Staff of the SECs Boston Office investigated certain matters that arose in the defined contribution plan administration business formerly conducted by Putnam Fiduciary Trust Company (PFTC). One of the matters related to the manner in which certain operational errors were corrected in connection with a January 2001 transfer and investment of assets on behalf of a 401(k) defined contribution plan. The manner in which these errors were corrected affected the plan and five of the Putnam Funds in which certain plan assets were invested. Following the discovery of this matter, Putnam notified the regulatory authorities, made restitution to the plan and the affected Putnam Funds and made a number of changes in its personnel and procedures. A second matter related to the source and use of funds paid to a third-party vendor by PFTC in exchange for information consulting services. Putnam has re-processed the payment of these consulting expenses in accordance with Putnams corporate expense payment procedures. |
|
In October 2004 the Department of Labor indicated its preliminary belief that Putnam may have violated certain provisions of ERISA related to investments by the Putnam Profit Sharing Retirement Plan and certain discretionary ERISA accounts in Putnam Funds that pay 12b-1 fees. Putnam has made a written submission to the Department of Labor addressing these issues. |
|
Since December 2003, Putnam has received various requests for information from the Department of Labor regarding the Putnam Profit Sharing Retirement Plan, including requests for information relating to (i) Plan governance, (ii) Plan investments, including investments in MMC stock, (iii) the purported ERISA class actions relating to MMCs receipt of contingent commissions and other matters, which are discussed above, (iv) the market timing-related ERISA Actions, which are discussed below, and (v) the suspensions of trading in MMC stock imposed by Putnam on its employees in October and November 2004. |
|
The Fort Worth office of the SEC has stated that it does not believe that the previous structure of the Putnam Research Funds investment management fee, which included a performance component in addition to a base fee, fully complied with SEC regulations concerning performance fees. In order to resolve this matter, Putnam submitted an offer of settlement to the SECs Fort Worth office on December 30, 2005. The offer of settlement, pursuant to which Putnam would neither admit nor deny wrongdoing, remains subject to acceptance by the SEC. On November 18, 2005, in connection with the proposed |
settlement, Putnam reimbursed the Putnam Research Fund in a total amount of $1.65 million. The reimbursement represents a retroactive adjustment to the fee structure from April 1, 1997 (the date when the performance fee was put in effect) through September 27, 2004 (when the performance fee was terminated). |
|
Starting in May 2004, Putnam received and responded to requests for information from the Washington staff of the SECs Office of Compliance Inspections and Examinations, in the context of an SEC sweep concerning closed-end fund distributions. In April and July 2005, Putnam received and responded to follow-up requests concerning the same subject matter from the SECs Division of Enforcement, which has indicated its belief that Putnams issuance of notices to shareholders in connection with dividend payments by certain of Putnams closed-end funds did not comply with applicable SEC disclosure requirements. Putnam is currently engaged in discussions with the SEC staff regarding a resolution of this matter. |
|
Starting in January 2004, the NASD has made several requests for information relating to reimbursement of expenses to participants at certain sales meetings (during the period from 2001 to 2004). Putnam has fully responded to these requests and is cooperating with the NASDs investigation. |
|
MMC and Putnam, along with certain of their former officers and directors, were named in a consolidated amended class action complaint (the MMC Class Action) purportedly brought on behalf of all purchasers of the publicly-traded securities of MMC between January 3, 2000 and November 3, 2003 (the Class Period). In general, the MMC Class Action alleges that the defendants, including MMC, allowed certain mutual fund investors and fund managers to engage in market-timing in the Putnam Funds. The complaint further alleges that this conduct was not disclosed until late 2003, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that, as a result of defendants purportedly misleading statements or omissions, MMCs stock traded at inflated levels during the Class Period. The suit seeks unspecified damages and equitable relief. In an opinion dated February 27, 2006, the district court granted defendants motions to dismiss all claims against them. |
|
MMC and Putnam were also named as defendants in a consolidated amended complaint filed on behalf of a putative class of investors in certain Putnam Funds, and in another consolidated amended complaint in which certain fund investors purport to assert derivative claims on behalf of all Putnam Funds. These suits seek to recover unspecified damages allegedly suffered by the funds and their shareholders as a result of purported market-timing and late-trading activity that allegedly occurred in certain Putnam Funds. The derivative suit seeks additional relief, including termination of the investment advisory contracts between Putnam and the funds, cancellation of the funds 12b-1 plans and the return of all advisory and 12b-1 fees paid by the funds over a certain period of time. In addition to MMC and |
Putnam, the derivative suit names as defendants various Putnam affiliates, certain trustees of Putnam Funds, certain present and former Putnam officers and employees, and persons and entities that allegedly engaged in or facilitated market-timing or late trading activities in Putnam Funds. The complaints allege violations of Sections 11, 12(a), and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, Sections 36(a) and (b), 47 and 48(a) of the Investment Company Act of 1940, and Sections 206 and 215 of the Investment Advisers Act, as well as state law claims for breach of fiduciary duty, breach of contract, unjust enrichment and civil conspiracy. On November 3, 2005, with regard to the class action complaint, the court dismissed all claims against Putnam except for claims alleging violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 36(b) and 48(a) of the Investment Company Act of 1940. The court deferred ruling on MMCs motion to dismiss claims against MMC. With regard to the derivative complaint, the court further dismissed all claims against Putnam and MMC except for claims alleging violations of Section 36(b) and Section 48(a). Putnam has also been named as a defendant in its capacity as a sub-advisor to a non-Putnam fund in a class action suit pending in the District of Maryland against another mutual fund complex. |
|
A consolidated amended complaint asserting shareholder derivative claims has been filed, purportedly on behalf of MMC, against current and former members of MMCs Board of Directors, two of Putnams former officers, and MMC as a nominal defendant (the MMC Derivative Action). The MMC Derivative Action generally alleges that the members of MMCs Board of Directors violated the fiduciary duties they owed to MMC and its shareholders as a result of a failure of oversight of market-timing in the Putnam Funds. The MMC Derivative Action alleges that, as a result of the alleged violation of defendants fiduciary duties, MMC suffered damages. The suit seeks unspecified damages and equitable relief. MMC has also received two demand letters from stockholders asking the MMC Board of Directors to take action to remedy alleged breaches of duty by certain officers, directors, trustees or employees of MMC or Putnam, based on allegations of market-timing in the Putnam Funds. The first letter asked to have the Board of Trustees of the Putnam Funds, as well as the MMC Board, take action to remedy those alleged breaches of fiduciary duty. The second letter demanded that MMC commence legal proceedings against the MMC directors, the senior management of Putnam, the Putnam Funds Trustees and MMCs auditor to remedy those alleged breaches of fiduciary duty. |
|
MMC, Putnam, and various of their current and former officers, directors and employees have been named as defendants in two consolidated amended complaints that purportedly assert class action claims under ERISA (the ERISA Actions). The ERISA Actions, which have been brought by participants in MMCs Stock Investment Plan and Putnams Profit Sharing Retirement Plan, allege, among other things, that, in view of the market-timing trading activity that was allegedly allowed to occur at Putnam, the defendants knew or should have known that the investment of the plans funds in MMC stock and Putnams mutual fund shares was imprudent and that the defendants breached their fiduciary duties to the plan participants in making these investments. The ERISA Actions seek unspecified damages and equitable relief, including the restoration to the plans of all profits the defendants allegedly made through the use of the plans assets, an order compelling the defendants to make good to the plans all losses to the plans allegedly resulting from defendants alleged breaches of their fiduciary duties, and the imposition of a constructive trust on any amounts by which any defendant allegedly was unjustly enriched at the expense of the plans. |
|
A number of the Putnam Funds have been named as defendants in a purported class action brought on behalf of certain holders of the funds Class B shares who either (i) held such shares and were subject to certain contingent deferred sales charges (CDSCs) as of October 28, 2003, or (ii) were assessed a CDSC for redeeming such shares on or after October 28, 2003. Plaintiff alleges that Putnam engaged in misconduct constituting a breach of contract and breach of the covenant of good faith and fair dealing with purported class members by allowing market-timing. Plaintiff seeks, among other things, actual damages or statutory damages of $25 for each class member (whichever is greater) and relief from paying a CDSC for redeeming Class B shares. In August 2005, this action was transferred to the consolidated proceedings in the United States District Court for the District of Maryland, described above. |
|
Putnam Investment Management, LLC and Putnam Retail Management Limited Partnership have been sued in the United States District Court for the District of Massachusetts for alleged violations of Section 36(b) of the Investment Company Act of 1940 in connection with the receipt of purportedly excessive advisory and distribution fees paid by certain Putnam Funds in which plaintiffs purportedly owned shares. Plaintiffs seek, among other things, to recover the excessive advisory and distribution fees paid to defendants by those funds beginning one year prior to the filing of the complaint, rescission of the management and distribution agreements between defendants and the funds, and a prospective reduction in fees. On March 28, 2005, the Court granted in part and denied in part defendants motion to dismiss the complaint. Plaintiffs served an amended complaint on April 4, 2005. On January 19, 2006, the Court granted plaintiffs motion for leave to file a second amended complaint, and granted defendants motion for partial summary judgment, limiting the scope of the suit to the fees paid by the five Putnam Funds. |
|
Certain Putnam entities have been named as defendants in a suit brought in the District Court of Travis County, Texas by a former institutional client, the Employee Retirement System of Texas (ERS). ERS alleges that Putnam breached its investment management agreement and did not make appropriate disclosures to ERS at the time the investment management agreement was executed. Putnam has removed the action to the United States District Court for the Western District of Texas, and ERS has moved to remand the action to state court. Putnam also is awaiting the conclusion of an arbitration process involving similar issues with another former institutional client. Putnam has provided for the estimated liability related to this matter. |
|
Putnam may be subject to employment-related claims by former employees who left Putnam in connection with various regulatory inquiries, including claims relating to deferred compensation. A former Putnam senior executive has notified Putnam of his intention to initiate an arbitration proceeding against Putnam arising from the circumstances of his separation from Putnam. To date, no such action has been commenced. |
|
Commencing on July 9, 2004, PFTC, as well as Cardinal Health and a number of other Cardinal-related fiduciaries, were named as defendants in a litigation pending in the United States District Court for the Southern District of Ohio relating to the allegedly imprudent investment of retirement plan assets in Cardinal stock in the Cardinal Health Profit Sharing, |
Retirement and Savings Plan and its predecessor plans. PFTC was a directed trustee of this plan. At a hearing on February 10, 2006, the judge stated that he expected to dismiss the complaint with respect to PFTC and to issue a written opinion within two to three weeks. |
|
On June 13, 2005, the European Commission announced its intention to commence an investigation (a so-called sector inquiry) into competition in the financial services sector. In announcing the investigation, the Commission stated, among other things: The Commission is concerned that in some areas of business insurance (the provision of insurance products and services to businesses), competition may not be functioning as well as it could.... Insurance and reinsurance intermediation will also be part of the inquiry. |
|
On May 19, 2005, the SEC issued a subpoena to MMC relating to certain loss mitigation insurance and reinsurance products. The SEC had previously issued a subpoena to MMC in early 2003 relating to loss mitigation products. MMC and its subsidiaries have received similar inquiries from regulators and other authorities in several states. On April 18, 2005, the Office of Insurance Regulation in the State of Florida issued a subpoena to Guy Carpenter & Company, Inc. concerning certain reinsurance products. On May 4, 2005, the Office of Insurance and Fire Safety Commissioner in the State of Georgia issued a subpoena to MMC that requested, among other things, information relating to finite insurance placements. On May 23, 2005, the Office of the Attorney General in the State of Connecticut issued a subpoena to MMC concerning finite insurance. MMC and its subsidiaries are cooperating with these and other informal inquiries. |
|
The SEC is examining the practices, compensation arrangements and disclosures of consultants that provide services to sponsors of pension plans or other market participants, including among other things, practices with respect to advice regarding the selection of investment advisors to manage plan assets. On March 22, 2005, Mercer Investment Consulting, Inc. (Mercer IC) received a letter from the SEC outlining its findings and requesting that Mercer IC improve certain disclosures and procedures. On April 22, 2005, Mercer IC responded to that letter, indicating that it had made or will make the improvements requested by the SEC. Since that time, Mercer IC received separate letters from the Boston office of the Enforcement Division of the SEC requesting additional information. Mercer IC has responded to these requests and continues to cooperate with the SEC. |
|
In November 2004, MMC, Putnam and Mercer received requests for information from the Boston office of the Enforcement Division of the SEC in connection with an informal investigation of a former program pursuant to which MMC affiliates referred business to one another and received compensation for such referrals. MMC, Putnam and Mercer responded to these requests and are cooperating with the SEC. |
|
On February 8, 2005 the Department of Labor served a subpoena on MMC seeking documents pertaining to services provided by MMC subsidiaries to employee benefit plans, including but not limited to documents relating to how such subsidiaries have been compensated for such services. The request also sought information concerning market service agreements and the solicitation of bids from insurance companies in connection with such services. MMC is cooperating with the Department of Labor. |
|
On December 21, 2004, MMC received a request for information pursuant to a formal investigation commenced by the SEC. The request for information seeks documents |
concerning related-party transactions of MMC or MMC subsidiaries in which transactions a director, executive officer or 5% stockholder of MMC had a direct or indirect material interest. On April 29, 2005, MMC received a subpoena from the SEC broadening the scope of the original request. MMC is cooperating in the investigation. Certain current and former employees of MMC have been noticed to testify in connection with this matter. |
|
MMC and its subsidiaries are subject to a significant number of other claims, lawsuits and proceedings in the ordinary course of business. Such claims and lawsuits consist principally of alleged errors and omissions (known as E&Os) in connection with the performance of professional services. Some of these claims seek damages, including punitive damages, in amounts that could, if awarded, be significant. MMC provides for these exposures by a combination of third-party insurance and self-insurance. For policy years 20002001 and prior, substantial third-party insurance is in place above the annual aggregate limits of MMCs self-insured retention, which was $50 million annually for policy years 19981999, 19992000 and 20002001. To the extent that expected losses exceed MMCs self-insured retention in any policy year, MMC records an asset for the amount that MMC expects to recover under its third-party insurance programs. The policy limits and coverage terms of the third-party insurance vary to some extent by policy year, but MMC is not aware of coverage defenses or other obstacles to coverage that would limit recoveries in those years in a material amount. In policy years subsequent to 20002001, the availability of third-party insurance has declined substantially which has caused MMC to assume increasing levels of self-insurance. MMC utilizes internal actuarial and other estimates, and case level reviews by inside and outside counsel, to establish loss reserves which it believes are adequate to provide for this self-insured retention. These reserves are reviewed quarterly and adjusted as developments warrant. |
|
On February 7, 2005, Olwyco LLC (Olwyco) commenced a lawsuit in the United States District Court for the Southern District of New York, and, after voluntarily dismissing that action, subsequently filed a new complaint in New York State Supreme Court, County of New York (the State Lawsuit). The claims in the State Lawsuit, which named MMC, Mercer Management Consulting, Inc. (Mercer Management) and Mercer Inc. as defendants, arose from a February 21, 2003 agreement in which Mercer Management agreed to purchase substantially all of Olwycos assets and, as part of the consideration, to transfer shares of MMC stock to Olwyco in April 2005, 2006 and 2007. Olwyco alleged that the price of MMC stock at the time of the agreement was inflated artificially as a result of a failure to disclose alleged violations of law that later became the subject of the NYAG Lawsuit and the Putnam market timing litigation. In December 2005, the parties agreed to settle this matter, and the State Lawsuit has been dismissed with prejudice. |
|
In connection with its acquisition of U.K.-based Sedgwick Group in 1998, MMC acquired several insurance underwriting businesses that were already in run-off, including River Thames Insurance Company Limited (River Thames), which MMC sold in 2001. Sedgwick guaranteed payment of claims on certain policies underwritten through the Institute of London Underwriters (the ILU) by River Thames (such guarantee being hereinafter referred to as the ILU Guarantee). The policies covered by the ILU Guarantee are reinsured up to £40 million by a related party of River Thames. Payment of claims under the reinsurance agreement is collateralized by segregated assets held in a trust. As of December 31, 2005, the reinsurance coverage exceeded the best estimate of the projected liability of the policies covered by the ILU Guarantee. To the extent River Thames or the reinsurer is unable to |
17. |
Segment Information |
|
Risk and Insurance Services, comprising insurance services (Marsh), reinsurance services (Guy Carpenter), and Risk Capital Holdings; |
|
Risk Consulting and Technology (Kroll); |
|
Consulting, including Mercer Human Resource Consulting and Mercers Specialty Consulting businesses; and |
|
Investment Management (Putnam). |
For
the Years Ended December 31, (In millions of dollars) |
|
Revenue
|
|
Operating Income |
|
Total Assets |
|
Depreciation and Amortization |
|
Capital Expenditures |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
||||||||||||||||||||
Risk
and Insurance Services |
$ | 5,592 | (a) | $ | 305 | $ | 11,465 | $ | 221 | $ | 153 | |||||||||
Risk
Consulting & Technology |
946 | (b) | 124 | 2,524 | 84 | 54 | ||||||||||||||
Consulting |
3,802 | (c) | 451 | 3,595 | 96 | 83 | ||||||||||||||
Investment Management |
1,506 | (d) | 263 | 1,882 | 69 | 36 | ||||||||||||||
Total Operating Segments |
$ | 11,846 | $ | 1,143 | $ | 19,466 | $ | 470 | $ | 326 | ||||||||||
Corporate/Eliminations |
(194 | ) | (287 | ) (e) | (1,727 | ) (f) | 11 | 2 | ||||||||||||
Assets of Discontinued Operations |
| | 153 | | 17 | |||||||||||||||
Total Consolidated |
$ | 11,652 | $ | 856 | $ | 17,892 | $ | 481 | $ | 345 | ||||||||||
2004 |
||||||||||||||||||||
Risk
and Insurance Services |
$ | 6,205 | (a) | $ | 84 | $ | 9,428 | $ | 225 | $ | 223 | |||||||||
Risk
Consulting & Technology |
405 | (b) | 48 | 2,284 | 33 | 21 | ||||||||||||||
Consulting |
3,637 | (c) | 409 | 3,858 | (g) | 99 | 55 | |||||||||||||
Investment Management |
1,710 | (d) | 98 | 2,038 | 79 | 49 | ||||||||||||||
Total Operating Segments |
$ | 11,957 | $ | 639 | $ | 17,608 | $ | 436 | $ | 348 | ||||||||||
Corporate/Eliminations |
(196 | ) | (39 | ) | (717 | )(f) | 14 | 14 | ||||||||||||
Assets of Discontinued Operations |
| | 173 | | 14 | |||||||||||||||
Total Consolidated |
$ | 11,761 | $ | 600 | $ | 18,498 | $ | 450 | $ | 376 | ||||||||||
2003 |
||||||||||||||||||||
Risk
and Insurance Services |
$ | 6,133 | (a) | $ | 1,607 | $ | 8,876 | $ | 199 | $ | 275 | |||||||||
Risk
Consulting & Technology |
19 | (b) | (8 | ) | | | | |||||||||||||
Consulting |
3,290 | (c) | 461 | 3,552 | (g) | 89 | 70 | |||||||||||||
Investment Management |
1,955 | (d) | 503 | 2,303 | 87 | 45 | ||||||||||||||
Total Operating Segments |
$ | 11,397 | $ | 2,563 | $ | 14,731 | $ | 375 | $ | 390 | ||||||||||
Corporate/Eliminations |
(197 | ) | (115 | ) | 185 | (f) | 12 | 40 | ||||||||||||
Assets of Discontinued Operations |
| | 137 | | 6 | |||||||||||||||
Total Consolidated |
$ | 11,200 | $ | 2,448 | $ | 15,053 | $ | 387 | $ | 436 |
(a) |
Includes interest income on fiduciary funds ($151 million in 2005, $130 million in 2004 and $114 million in 2003). |
(b) |
Includes inter-segment revenue ($27 million in 2005 and $2 million in 2004). |
(c) |
Includes inter-segment revenue ($154 million in 2005, $173 million in 2004, and $184 million in 2003). |
(d) |
Includes inter-segment revenue ($10 million in 2005 and 2004, and $8 million in 2003). |
(e) |
Corporate expenses in 2005 include $64 million of incremental expense, primarily related to stock options, resulting from the implementation of SFAS 123(R) effective July 1, 2005. |
(f) |
Corporate assets primarily include unallocated goodwill, insurance recoverables, prepaid pension and a portion of MMCs headquarters building. |
(g) |
Total consulting assets are higher than previously reported in 2004 due to the Investment in Delta held by Human Resource Consulting not eliminated after the split of the two consulting product lines. Offset included in Corporate/Eliminations. |
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Risk &
Insurance Services |
||||||||||||||
Insurance
Services |
$ | 4,567 | $ | 5,166 | $ | 5,167 | ||||||||
Reinsurance
Services |
836 | 859 | 836 | |||||||||||
Risk Capital Holdings |
189 | 180 | 130 | |||||||||||
Total Risk & Insurance Services |
5,592 | 6,205 | 6,133 | |||||||||||
Risk Consulting & Technology |
946 | 405 | 19 | |||||||||||
Consulting |
||||||||||||||
Human
Resource Consulting |
2,708 | 2,704 | 2,533 | |||||||||||
Specialty Consulting |
909 | 774 | 612 | |||||||||||
3,617 | 3,478 | 3,145 | ||||||||||||
Reimbursed Expenses |
185 | 159 | 145 | |||||||||||
Total Consulting |
3,802 | 3,637 | 3,290 | |||||||||||
Investment Management |
1,506 | 1,710 | 1,955 | |||||||||||
Total Operating Segments |
$ | 11,846 | $ | 11,957 | $ | 11,397 | ||||||||
Corporate/Eliminations |
(194 | ) | (196 | ) | (197 | ) | ||||||||
Total |
$ | 11,652 | $ | 11,761 | $ | 11,200 |
(In millions of dollars) |
|
2005 |
|
2004 |
|
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Geographic
Area: |
||||||||||||||
External
Revenue |
||||||||||||||
United
States |
$ | 6,818 | $ | 7,033 | $ | 7,180 | ||||||||
United
Kingdom |
2,043 | 2,083 | 1,760 | |||||||||||
Continental
Europe |
1,461 | 1,456 | 1,241 | |||||||||||
Other |
1,524 | 1,385 | 1,216 | |||||||||||
$ | 11,846 | $ | 11,957 | $ | 11,397 | |||||||||
Corporate/Eliminations |
(194 | ) | (196 | ) | (197 | ) | ||||||||
$ | 11,652 | $ | 11,761 | $ | 11,200 | |||||||||
Fixed
Assets |
||||||||||||||
United
States |
$ | 782 | $ | 882 | $ | 907 | ||||||||
United
Kingdom |
232 | 308 | 308 | |||||||||||
Continental
Europe |
74 | 85 | 78 | |||||||||||
Other |
90 | 88 | 82 | |||||||||||
$ | 1,178 | $ | 1,363 | $ | 1,375 |
|
The transfer of Marshs U.K. employee benefits business from Insurance Services to Human Resource Consulting. |
|
The transfer of several consulting businesses, which included business continuity management, mass tort and complex liability mitigation, and data services for the management of insurance, claims and legal data, from Risk Consulting & Technology to Insurance Services. |
|
The discontinued operations classifications for the U.S. wholesale broking and claims management businesses, which were previously part of Related Insurance Services. |
Revenue: |
Three Months Ended (Unaudited) |
Twelve Months Ended |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
March 31, |
June 30, |
Sept. 30, |
Dec. 31, |
Dec. 31, |
||||||||||||||||||
Risk and
Insurance Services |
|||||||||||||||||||||||
Insurance
Services |
$ | 1,232 | $ | 1,172 | $ | 1,028 | $ | 1,135 | $ | 4,567 | |||||||||||||
Reinsurance
Services |
282 | 192 | 207 | 155 | 836 | ||||||||||||||||||
Risk Capital
Holdings |
63 | 54 | 45 | 27 | 189 | ||||||||||||||||||
Total Risk
and Insurance Services |
1,577 | 1,418 | 1,280 | 1,317 | 5,592 | ||||||||||||||||||
Risk
Consulting & Technology |
233 | 241 | 242 | 230 | 946 | ||||||||||||||||||
Consulting |
|||||||||||||||||||||||
Human
Resource Consulting |
676 | 696 | 672 | 664 | 2,708 | ||||||||||||||||||
Specialty
Consulting |
210 | 229 | 222 | 248 | 909 | ||||||||||||||||||
886 | 925 | 894 | 912 | 3,617 | |||||||||||||||||||
Reimbursed
Expenses |
38 | 47 | 46 | 54 | 185 | ||||||||||||||||||
Total
Consulting |
924 | 972 | 940 | 966 | 3,802 | ||||||||||||||||||
Investment
Management |
398 | 377 | 371 | 360 | 1,506 | ||||||||||||||||||
Total
Operating Segments |
3,132 | 3,008 | 2,833 | 2,873 | 11,846 | ||||||||||||||||||
Corporate
Eliminations |
(62 | ) | (31 | ) | (54 | ) | (47 | ) | (194 | ) | |||||||||||||
Total
Revenue |
$ | 3,070 | $ | 2,977 | $ | 2,779 | $ | 2,826 | $ | 11,652 |
Three Months Ended (Unaudited) |
Twelve Months Ended |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
March 31, |
June 30, |
Sept. 30, |
Dec. 31, |
Dec. 31, |
||||||||||||||||||
Risk and
Insurance Services |
|||||||||||||||||||||||
Insurance
Services |
$ | 1,478 | $ | 1,365 | $ | 1,127 | $ | 1,196 | $ | 5,166 | |||||||||||||
Reinsurance
Services |
283 | 211 | 209 | 156 | 859 | ||||||||||||||||||
Risk Capital
Holdings |
37 | 40 | 45 | 58 | 180 | ||||||||||||||||||
Total Risk
and Insurance Services |
1,798 | 1,616 | 1,381 | 1,410 | 6,205 | ||||||||||||||||||
Risk
Consulting & Technology |
4 | 4 | 196 | 201 | 405 | ||||||||||||||||||
Consulting |
|||||||||||||||||||||||
Human
Resource Consulting |
688 | 694 | 674 | 648 | 2,704 | ||||||||||||||||||
Specialty
Consulting |
180 | 187 | 192 | 215 | 774 | ||||||||||||||||||
868 | 881 | 866 | 863 | 3,478 | |||||||||||||||||||
Reimbursed
Expenses |
35 | 40 | 39 | 45 | 159 | ||||||||||||||||||
Total
Consulting |
903 | 921 | 905 | 908 | 3,637 | ||||||||||||||||||
Investment
Management |
450 | 434 | 415 | 411 | 1,710 | ||||||||||||||||||
Total
Operating Segments |
3,155 | 2,975 | 2,897 | 2,930 | 11,957 | ||||||||||||||||||
Corporate
Eliminations |
(51 | ) | (43 | ) | (52 | ) | (50 | ) | (196 | ) | |||||||||||||
Total
Revenue |
$ | 3,104 | $ | 2,932 | $ | 2,845 | $ | 2,880 | $ | 11,761 |
Consolidated Statements of Income: |
Three Months Ended (Unaudited) |
Twelve Months Ended |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 |
March 31, |
June 30, |
Sept. 30, |
Dec. 31, |
Dec. 31, |
||||||||||||||||||
Operating
Income (Loss): |
|||||||||||||||||||||||
Risk and
Insurance Services |
$ | 137 | $ | 86 | $ | 20 | $ | 62 | $ | 305 | |||||||||||||
Risk
Consulting & Technology |
37 | 36 | 36 | 15 | 124 | ||||||||||||||||||
Consulting |
110 | 130 | 117 | 94 | 451 | ||||||||||||||||||
Investment
Management |
50 | 71 | 83 | 59 | 263 | ||||||||||||||||||
Corporate |
(73 | ) | (30 | ) | (69 | ) | (115 | ) | (287 | ) | |||||||||||||
261 | 293 | 187 | 115 | 856 | |||||||||||||||||||
Interest
Income |
9 | 11 | 13 | 14 | 47 | ||||||||||||||||||
Interest
Expense |
(69 | ) | (73 | ) | (111 | ) | (79 | ) | (332 | ) | |||||||||||||
Income
Before Income Taxes and Minority Interest, Net of Tax |
201 | 231 | 89 | 50 | 571 | ||||||||||||||||||
Income
Taxes |
70 | 69 | 24 | 29 | 192 | ||||||||||||||||||
Minority
Interest Expense, Net of Tax |
2 | 2 | 2 | 4 | 10 | ||||||||||||||||||
Income
From Continuing Operations |
129 | 160 | 63 | 17 | 369 | ||||||||||||||||||
Discontinued Operations, Net of Tax |
5 | 7 | 5 | 18 | 35 | ||||||||||||||||||
Net
Income |
$ | 134 | $ | 167 | $ | 68 | $ | 35 | $ | 404 | |||||||||||||
Basic
Income Per Share Continuing Operations |
$ | 0.24 | $ | 0.30 | $ | 0.12 | $ | 0.03 | $ | 0.69 | |||||||||||||
Diluted
Income Per Share Continuing Operations |
$ | 0.24 | $ | 0.30 | $ | 0.11 | $ | 0.03 | $ | 0.67 |
Three Months Ended (Unaudited) |
Twelve Months Ended |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
March 31, |
June 30, |
Sept. 30, |
Dec. 31, |
Dec. 31, |
||||||||||||||||||
Operating
Income (Loss): |
|||||||||||||||||||||||
Risk and
Insurance Services |
$ | 600 | $ | 418 | $ | (63 | ) | $ | (871 | ) | $ | 84 | |||||||||||
Risk
Consulting & Technology |
| | 26 | 22 | 48 | ||||||||||||||||||
Consulting |
116 | 138 | 125 | 30 | 409 | ||||||||||||||||||
Investment
Management |
(26 | ) | 99 | 56 | (31 | ) | 98 | ||||||||||||||||
Corporate |
72 | (36 | ) | (33 | ) | (42 | ) | (39 | ) | ||||||||||||||
762 | 619 | 111 | (892 | ) | 600 | ||||||||||||||||||
Interest
Income |
5 | 4 | 6 | 6 | 21 | ||||||||||||||||||
Interest
Expense |
(50 | ) | (48 | ) | (55 | ) | (66 | ) | (219 | ) | |||||||||||||
Income
(Loss) Before Income Taxes and Minority Interest, Net of Tax |
717 | 575 | 62 | (952 | ) | 402 | |||||||||||||||||
Income
Taxes |
278 | 188 | 45 | (271 | ) | 240 | |||||||||||||||||
Minority
Interest Expense, Net of Tax |
| 3 | 3 | 2 | 8 | ||||||||||||||||||
Income
(Loss) From Continuing Operations |
439 | 384 | 14 | (683 | ) | 154 | |||||||||||||||||
Discontinued Operations, Net of Tax |
7 | 5 | 7 | 3 | 22 | ||||||||||||||||||
Net Income
(Loss) |
$ | 446 | $ | 389 | $ | 21 | $ | (680 | ) | $ | 176 | ||||||||||||
Basic
Income (Loss) Per Share Continuing Operations |
$ | 0.84 | $ | 0.74 | $ | 0.03 | $ | (1.29 | ) | $ | 0.29 | ||||||||||||
Diluted
Income (Loss) Per Share Continuing Operations |
$ | 0.82 | $ | 0.72 | $ | 0.03 | $ | (1.29 | ) | $ | 0.29 |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In millions of dollars, except per share
figures) |
|||||||||||||||||||
2005: |
|||||||||||||||||||
Revenue |
$ | 3,070 | $ | 2,977 | $ | 2,779 | $ | 2,826 | |||||||||||
Operating
income(a) |
$ | 261 | $ | 293 | $ | 187 | $ | 115 | |||||||||||
Income from
continuing operations |
$ | 129 | $ | 160 | $ | 63 | $ | 17 | |||||||||||
Income from
discontinued operations |
$ | 5 | $ | 7 | $ | 5 | $ | 18 | |||||||||||
Net
income |
$ | 134 | $ | 167 | $ | 68 | $ | 35 | |||||||||||
Basic Per
Share Data: |
|||||||||||||||||||
Income from
continuing operations |
$ | 0.24 | $ | 0.30 | $ | 0.12 | $ | 0.03 | |||||||||||
Income from
discontinued operations |
$ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.03 | |||||||||||
Net
income |
$ | 0.25 | $ | 0.31 | $ | 0.13 | $ | 0.06 | |||||||||||
Diluted Per
Share Data:(a) |
|||||||||||||||||||
Income from
continuing operations |
$ | 0.24 | $ | 0.30 | $ | 0.11 | $ | 0.03 | |||||||||||
Income from
discontinued operations |
$ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.03 | |||||||||||
Net
income |
$ | 0.25 | $ | 0.31 | $ | 0.12 | $ | 0.06 | |||||||||||
Dividends
Paid Per Share |
$ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | |||||||||||
2004: |
|||||||||||||||||||
Revenue |
$ | 3,104 | $ | 2,932 | $ | 2,845 | $ | 2,880 | |||||||||||
Operating
income (loss) |
$ | 762 | $ | 619 | $ | 111 | $ | (892 | ) | ||||||||||
Income (loss)
from continuing operations |
$ | 439 | $ | 384 | $ | 14 | $ | (683 | ) | ||||||||||
Income from
discontinued operations |
$ | 7 | $ | 5 | $ | 7 | $ | 3 | |||||||||||
Net income
(loss) |
$ | 446 | $ | 389 | $ | 21 | $ | (680 | ) | ||||||||||
Basic Per
Share Data: |
|||||||||||||||||||
Income (loss)
from continuing operations |
$ | 0.84 | $ | 0.74 | $ | 0.03 | $ | (1.29 | ) | ||||||||||
Income from
discontinued operations |
$ | 0.01 | $ | 0.01 | $ | 0.01 | $ | | |||||||||||
Net income
(loss) |
$ | 0.85 | $ | 0.75 | $ | 0.04 | $ | (1.29 | ) | ||||||||||
Diluted Per
Share Data: |
|||||||||||||||||||
Income (loss)
from continuing operations |
$ | 0.82 | $ | 0.72 | $ | 0.03 | $ | (1.29 | ) | ||||||||||
Income from
discontinued operations |
$ | 0.01 | $ | 0.01 | $ | 0.01 | $ | | |||||||||||
Net income
(loss) |
$ | 0.83 | $ | 0.73 | $ | 0.04 | $ | (1.29 | ) | ||||||||||
Dividends
Paid Per Share |
$ | 0.31 | $ | 0.31 | $ | 0.34 | $ | 0.34 |
Michael G.
Cherkasky |
Sandra S.
Wijnberg |
|||||
President
and |
Senior Vice
President and |
|||||
Chief Executive
Officer |
Chief Financial
Officer |
|||||
February 27,
2006 |
February 27,
2006 |
Plan category |
|
(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)(2) |
|
(b) Weighted-average exercise price of outstanding options, warrants and rights (2) |
|
(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (2) |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by stockholders |
17,945,747 | $ | 35.8552 | 39,694,843 | (3) | |||||||||
Equity compensation plans not approved by stockholders |
48,329,828 | $ | 33.7637 | 44,008,145 | (4) | |||||||||
Total |
66,275,575 | (5) | $ | 34.3300 | 83,702,988 | (5) |
(1) |
This column reflects shares subject to unexercised options granted over the last ten years under MMCs 2000 Senior Executive Incentive and Stock Award Plan, 1997 Senior Executive Incentive and Stock Award Plan, 1992 Incentive and Stock Award Plan, 2000 Employee Incentive and Stock Award Plan and 1997 Employee Incentive and Stock Award Plan. This column contains information regarding stock options only; there are no warrants or stock appreciation rights outstanding. |
(2) |
The number of shares that may be issued at the close of current offering periods under stock purchase plans, and the weighted-average exercise price of such shares, is uncertain and is consequently not reflected in columns (a) and (b). The number of shares to be purchased will depend on the amount of contributions with interest accumulated under these plans as of the close of the offering periods. The shares remaining available for future issuance in column (c) includes any shares that may be acquired under all current offering periods for these plans. See notes (3) and (4) below. |
(3) |
Includes the following: |
|
24,180,209 shares available for future awards under the 1999 Employee Stock Purchase Plan, a stock purchase plan qualified under Section 423 of the Internal Revenue Code. Employees may acquire shares at a discounted purchase price on four quarterly purchase dates within the one-year offering period with the proceeds of their contributions plus interest accumulated during the respective quarter. Prior to October 3, 2005, the shares could be |
purchased at a 15% discount. Effective October 3, 2005, the discount was reduced to 5%; therefore, the purchase price may be no less than 95% of the market price of the stock on the purchase date. |
|
2,925,530 shares that may be issued to settle outstanding restricted stock unit, deferred stock unit and deferred bonus unit awards and other deferred compensation obligations. |
|
8,536,883 shares available for future awards under the 2000 Senior Executive Incentive and Stock Award Plan. Awards may consist of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, deferred bonus units, dividend equivalents, stock bonus, performance awards and other unit-based or stock-based awards. |
|
3,106,310 shares available for future deferrals directed into share units under the Stock Investment Supplemental Plan, a nonqualified deferred compensation plan providing benefits to employees whose benefits are limited under the tax-qualified Stock Investment Plan, an employee stock ownership plan with a 401(k) feature. |
|
945,911 shares available for future awards under the Directors Stock Compensation Plan. Awards may consist of shares, deferred stock units and dividend equivalents. |
(4) |
Includes the following: |
|
10,016,065 shares available for future awards under the Stock Purchase Plan for International Employees, Stock Purchase Plan for French Employees, Save as You Earn Plan (U.K.), and Irish Savings Related Share Option Scheme. |
|
11,933,931 shares that may be issued to settle outstanding restricted stock unit, deferred stock unit and deferred bonus unit awards under the 2000 Employee Incentive and Stock Award Plan and predecessor plans and programs. |
|
19,920,081 shares available for future awards under the 2000 Employee Incentive and Stock Award Plan. Awards may consist of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, deferred bonus units, dividend equivalents, stock bonus, performance awards and other unit-based or stock-based awards. |
|
128,176 shares available for future awards under the Approved Share Participation Schemes for employees in Ireland. Awards are made in shares of stock. |
|
1,508,762 shares available for future awards, and 501,130 shares that may be issued to settle outstanding awards, under the Special Severance Pay Plan. Awards consist of stock units and dividend equivalents. |
(5) |
MMCs Board of Directors has authorized the repurchase of common stock, including an ongoing authorization to repurchase shares in connection with awards granted under equity-based compensation plans, subject to market conditions and other factors. MMC did not repurchase any stock in 2005. See the Liquidity and Capital Resources section of Item 7 (Managements Discussion and Analysis of Financial Condition and Results of Operations) of this report, and the Issuer Repurchases of Equity Securities table under Item 5 (Market for MMCs Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities) of this report. |
|
Stock Purchase Plan for International Employees, Stock Purchase Plan for French Employees, Save As You Earn Plan (U.K.) and Irish Savings Related Share Option Scheme. Eligible employees may elect to contribute to these plans through regular payroll deductions over an offering period which varies by plan from 1 to 5 years. On each purchase date, generally the end of the offering period, participants may receive their contributions plus interest in cash or use that amount to acquire shares of stock at a discounted purchase price. Prior to the changes detailed below, under the International Plan, the purchase price may be no less than 85% of the market price of the stock on each of four quarterly purchase dates within the one-year offering period. Under the French Plan, the purchase price may be no less than 85% of the market price of the stock at the end of the offering period. Under the U.K. and Irish Plans, the purchase price may be no less than 80% of the market price of the stock at the beginning of the offering period. The discount for each of these plans was reduced to 5%, with effective dates as follows; Save as You Earn Plan (U.K.), October 1, 2005; Stock Purchase Plan for International Employees, October 3, 2005; Irish Savings Related Share Option Scheme, November 1, 2005; and Stock Purchase Plan for French Employees, January 1, 2006. |
|
2000 Employee Incentive and Stock Award Plan and predecessor plans and programs. The terms of this plan and the 1997 Employee Incentive and Stock Award Plan are described in Note 8 to the Consolidated Financial Statements included below under Item 8 of this report. In addition, the Stock Bonus Award Program provided for the payment of up to 50% of annual bonuses otherwise payable in cash, in the form of deferred stock units or deferred bonus units which are settled in shares. No future awards may be granted under any predecessor plan or program. |
|
Approved Share Participation Schemes for Employees in Ireland. Eligible participants may elect to acquire shares of stock at market price by allocating their bonus and up to an equivalent amount of their basic salary. The acquired shares are held in trust and generally may not be transferred for two years following their acquisition. The initial value of any shares held in trust for more than three years is not subject to income tax. |
|
Special Severance Pay Plan. Under this plan, certain holders of restricted stock or awards in lieu of restricted stock with at least 10 years of service will receive payment in shares upon forfeiture of their award if their employment with MMC or one of its subsidiaries 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. |
1. |
Consolidated Financial Statements: |
2. |
All required Financial Statement Schedules are included in the Consolidated Financial Statements or the Notes to Consolidated Financial Statements. |
3. |
The following exhibits are filed as a part of this report: |
(3.1) |
MMCs restated certificate of incorporation (incorporated by reference to MMCs Annual Report on Form 10-K for the year ended
December 31, 2003) |
|||||
(3.2) |
MMCs By-Laws (incorporated by reference to MMCs Current Report on Form 8-K dated March 16, 2005) |
|||||
(4.1) |
Indenture dated as of June 14, 1999 between MMC and State Street Bank and Trust Company, as trustee (incorporated by reference to MMCs
Registration Statement on Form S-3, Registration No. 333-108566) |
|||||
(4.2) |
First Supplemental Indenture dated as of June 14, 1999 between MMC and State Street Bank and Trust Company, as trustee (incorporated by
reference to MMCs Quarterly Report on Form 10-Q for the quarter ended June 30, 1999) |
|||||
(4.3) |
Second Supplemental Indenture dated as of February 19, 2003 between MMC and U.S. Bank National Association (as successor to State Street Bank
and Trust Company), as trustee (incorporated by reference to MMCs Quarterly Report on Form 10-Q for the quarter ended March 31,
2003) |
(4.4) |
Third Supplemental Indenture dated as of July 30, 2003 between MMC and U.S. National Bank Association (as successor to State Street Bank and
Trust Company), as trustee (incorporated by reference to MMCs Quarterly Report on Form 10-Q for the quarter ended June 30,
2003) |
|||||
(4.5) |
Indenture dated as of March 19, 2002 between MMC and State Street Bank and Trust Company, as trustee (incorporated by reference to MMCs
Registration Statement on Form S-4, Registration No. 333-87510) |
|||||
(4.6) |
Indenture, dated as of July 14, 2004, between MMC and The Bank of New York, as trustee (incorporated by reference to MMCs Quarterly
Report on Form 10-Q for the quarter ended June 30, 2004) |
|||||
(4.7) |
First Supplemental Indenture, dated as of July 14, 2004, between MMC and The Bank of New York, as trustee (incorporated by reference to
MMCs Quarterly Report on Form 10-Q for the quarter ended June 30, 2004) |
|||||
(4.8) |
Second Supplemental Indenture, dated as of September 16, 2005, between MMC and The Bank of New York, as trustee (incorporated by reference to
MMCs Current Report on Form 8-K dated September 13, 2005) |
|||||
(4.9) |
Amended and Restated Rights Agreement dated as of January 20, 2000 between MMC and Harris Trust Company of New York (incorporated by reference
to MMCs Registration Statement on Form 8-A/A filed on January 27, 2000) |
|||||
(4.10) |
Amendment No. 1 to Amended and Restated Rights Agreement dated as of June 7, 2002, by and between MMC and Harris Trust Company of New York
(incorporated by reference to MMCs Registration Statement on Form 8-A12B/A filed on June 20, 2002) |
|||||
(10.1) |
Agreement dated January 30, 2005 between the Attorney General of the State of New York and the Superintendent of Insurance of the State of New
York, and Marsh & McLennan Companies, Inc., Marsh Inc. and their subsidiaries and affiliates (the Settlement Agreement) (incorporated
by reference to MMCs Current Report on Form 8-K dated January 31, 2005) |
|||||
(10.2) |
Amendment No. 1, effective as of January 30, 2005, to the Settlement Agreement (incorporated by reference to MMCs Quarterly Report on
Form 10-Q for the quarter ended March 31, 2005) |
|||||
(10.3) |
Amendment No. 2, dated September 27, 2005, to the Settlement Agreement (incorporated by reference to MMCs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2005) |
|||||
(10.4) |
*Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive and Stock Award Plan (incorporated by reference to MMCs Annual
Report on Form 10-K for the year ended December 31, 1999) |
|||||
(10.5) |
*Amendments to Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive and Stock Award Plan and 2000 Employee Incentive and Stock
Award Plan (incorporated by reference to MMCs Quarterly Report on Form 10-Q for the quarter ended June 30, 2005) |
|||||
(10.6) |
*Form of Awards under the 2000 Senior Executive Incentive and Stock Award Plan (incorporated by reference to MMCs Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004) |
|||||
(10.7) |
*Additional Forms of Awards under the 2000 Senior Executive Incentive and Stock Award Plan (incorporated by reference to MMCs Quarterly
Report on Form 10-Q for the quarter ended March 31, 2005) |
(10.8) |
*Form of Restricted Stock Award under the MMC 2000 Senior Executive Incentive and Stock Award Plan (incorporated by reference to MMCs
Current Report on Form 8-K dated May 18, 2005) |
|||||
(10.9) |
*Marsh & McLennan Companies, Inc. 2000 Employee Incentive and Stock Award Plan (incorporated by reference to MMCs Annual Report on
Form 10-K for the year ended December 31, 2001) |
|||||
(10.10) |
*Form of Awards under the 2000 Employee Incentive and Stock Award Plan (incorporated by reference to MMCs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004) |
|||||
(10.11) |
*Additional Forms of Awards under the 2000 Employee Incentive and Stock Award Plan (incorporated by reference to MMCs Quarterly Report
on Form 10-Q for the quarter ended March 31, 2005) |
|||||
(10.12) |
*Marsh & McLennan Companies Stock Investment Supplemental Plan (incorporated by reference to MMCs Annual Report on Form 10-K for the
year ended December 31, 1994) |
|||||
(10.13) |
*Amendment to Marsh & McLennan Companies Stock Investment Supplemental Plan dated June 16, 1997 (incorporated by reference to MMCs
Annual Report on Form 10-K for the year ended December 31, 1997) |
|||||
(10.14) |
*Amendment to Marsh & McLennan Companies Stock Investment Supplemental Plan dated November 20, 1997 (incorporated by reference to
MMCs Annual Report on Form 10-K for the year ended December 31, 2000) |
|||||
(10.15) |
*Amendment to Marsh & McLennan Companies Stock Investment Supplemental Plan dated January 1, 2000 (incorporated by reference to MMCs
Annual Report on Form 10-K for the year ended December 31, 2000) |
|||||
(10.16) |
*Marsh & McLennan Companies Special Severance Pay Plan (incorporated by reference to MMCs Annual Report on Form 10-K for the year
ended December 31, 1996) |
|||||
(10.17) |
*Marsh & McLennan Companies Supplemental Retirement Plan (incorporated by reference to MMCs Annual Report on Form 10-K for the year
ended December 31, 1992) |
|||||
(10.18) |
*Amendment to Marsh & McLennan Companies Supplemental Retirement Plan (incorporated by reference to MMCs Quarterly Report on Form
10-Q for the quarter ended March 31, 2003) |
|||||
(10.19) |
*Marsh & McLennan Companies Senior Management Incentive Compensation Plan (incorporated by reference to MMCs Annual Report on Form
10-K for the year ended December 31, 1994) |
|||||
(10.20) |
*Marsh & McLennan Companies, Inc. Directors Stock Compensation Plan (incorporated by reference to MMCs Annual Report on Form 10-K
for the year ended December 31, 1997) |
|||||
(10.21) |
*Putnam Investments, Inc. Executive Deferred Compensation Plan (incorporated by reference to MMCs Annual Report on Form 10-K for the
year ended December 31, 1994) |
|||||
(10.22) |
*Putnam Investments, LLC Executive Deferred Bonus Plan (incorporated by reference to MMCs Annual Report on Form 10-K for the year ended
December 31, 2000) |
|||||
(10.23) |
*Putnam Investments Trust Equity Partnership Plan |
(10.24) |
*Employment Agreement, dated as of July 20, 2005, by and between Marsh & McLennan Companies, Inc. and Michael G. Cherkasky (incorporated
by reference to MMCs Current Report on Form 8-K dated July 25, 2005) |
|||||
(10.25) |
*Employment Agreement, dated as of August 22, 2005, by and between Marsh & McLennan Companies, Inc. and Sandra S. Wijnberg (incorporated
by reference to MMCs Current Report on Form 8-K dated August 22, 2005) |
|||||
(10.26) |
*Employment Agreement, amended and restated November 7, 2005, effective as of September 9, 2005, by and between Marsh & McLennan
Companies, Inc. and Brian M. Storms (incorporated by reference to MMCs Quarterly Report on Form 10-Q for the quarter ended September 30,
2005) |
|||||
(10.27) |
*Employment Agreement, dated November 17, 2005 and effective as of November 1, 2005, between Marsh & McLennan Companies, Inc. and Mathis
Cabiallavetta (incorporated by reference to MMCs Current Report on Form 8-K dated November 17, 2005) |
|||||
(10.28) |
*Employment Agreement, dated as of December 19, 2005, between Marsh & McLennan Companies, Inc. and M. Michele Burns (incorporated by
reference to MMCs Current Report on Form 8-K dated December 16, 2005) |
|||||
(10.29) |
*Employment Agreement, dated as of February 27, 2006, between Marsh & McLennan Companies, Inc. and Charles E. Haldeman
Jr. |
|||||
(10.30) |
*Description of Compensation Arrangement with Robert F. Erburu, Chairman of the Board of Directors of MMC (incorporated by reference to
MMCs Quarterly Report on Form 10-Q for the quarter ended June 30, 2005) |
|||||
(10.31) |
*Amended and Restated Limited Partnership Agreement of Marsh & McLennan Affiliated Fund, L.P. dated October 12, 1999 (incorporated by
reference to MMCs Annual Report on Form 10-K for the year ended December 31, 2001) |
|||||
(10.32) |
*Limited Liability Company Agreement of Putnam Investments Employees Securities Company I LLC dated as of October 3, 2000 (incorporated
by reference to MMCs Annual Report on Form 10-K for the year ended December 31, 2001) |
|||||
(10.33) |
*Limited Liability Company Agreement of Putnam Investments Employees Securities Company II LLC dated as of June 15, 2002 (incorporated
by reference to MMCs Annual Report on Form 10-K for the year ended December 31, 2001) |
|||||
(10.34) |
Representative Fund Advisory Contract with each of the Putnam Funds (incorporated by reference to MMCs Quarterly Report on Form 10-Q for
the quarter ending June 30, 2002) |
|||||
(12) |
Statement Re: Computation of Ratio of Earnings to Fixed Charges |
|||||
(14) |
Code
of Ethics for Chief Executive and Senior Financial Officers (incorporated by reference to MMCs Annual Report on Form 10-K for the year ended
December 31, 2002) |
|||||
(21) |
List
of Subsidiaries of MMC (as of 2/17/2006) |
|||||
(23) |
Consent of Independent Registered Public Accounting Firm |
|||||
(31) |
Rule
13a-14(a)/15d-14(a) Certifications |
|||||
(32) |
Section 1350 Certifications |
* |
Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K. |
By |
/s/Michael G. Cherkasky Michael G. Cherkasky Chief Executive Officer and President |
Name |
Title |
Date |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
/s/Michael G.
Cherkasky Michael G. Cherkasky |
Director, Chief
Executive Officer & President |
March 1,
2006 |
||||||||
/s/Sandra S.
Wijnberg Sandra S. Wijnberg |
Senior Vice
President & Chief Financial Officer |
March 1,
2006 |
||||||||
/s/Robert J.
Rapport Robert J. Rapport |
Vice President
& Controller (Chief Accounting Officer) |
March 1,
2006 |
||||||||
/s/Leslie M.
Baker, Jr. Leslie M. Baker, Jr. |
Director |
March 1,
2006 |
||||||||
/s/Lewis W.
Bernard Lewis W. Bernard |
Director |
March 1,
2006 |
||||||||
/s/Zachary W.
Carter Zachary W. Carter |
Director |
March 1,
2006 |
||||||||
/s/Robert F.
Erburu Robert F. Erburu |
Director |
March 1,
2006 |
||||||||
/s/Oscar
Fanjul Oscar Fanjul |
Director |
March 1,
2006 |
||||||||
/s/Stephen R.
Hardis Stephen R. Hardis |
Director |
March 1,
2006 |
Name |
Title |
Date | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
/s/Gwendolyn S.
King Gwendolyn S. King |
Director |
March 1,
2006 |
||||||||
/s/The Rt. Hon.
Lord Lang of Monkton, DL The Rt. Hon. Lord Lang of Monkton, DL |
Director |
March 1,
2006 |
||||||||
/s/Marc D.
Oken Marc D. Oken |
Director |
March 1,
2006 |
||||||||
/s/David A.
Olsen David A. Olsen |
Director |
March 1,
2006 |
||||||||
/s/Morton O.
Schapiro Morton O. Schapiro |
Director |
March 1,
2006 |
||||||||
/s/Adele
Simmons Adele Simmons |
Director |
March 1,
2006 |
PUTNAM INVESTMENTS TRUST
EQUITY PARTNERSHIP PLAN
(Amended and Restated as of September 6, 2005)
TABLE OF CONTENTS
Section 1. Purpose |
1 | |
Section 2. Definitions |
1 | |
Definitions |
1 | |
Gender and Number |
6 | |
Section 3. Eligibility and Participation |
7 | |
Section 4. Administration |
7 | |
Power to Grant |
7 | |
Administration |
7 | |
Section 5. Awards Under the Plan |
7 | |
Types of Awards |
7 | |
Number of Class B Shares Subject to Awards |
7 | |
Cancelled, Terminated or Forfeited Awards |
8 | |
Adjustment in Capitalization |
8 | |
Legend |
8 | |
Section 6. Terms of Awards |
8 | |
Restricted Stock |
8 | |
Options |
9 | |
Section 7. Termination of Employment; Unforeseen Personal Hardship |
10 | |
Special Termination |
10 | |
Termination for Cause |
10 | |
Involuntary Termination Other Than for Cause |
11 | |
Other Termination of Employment |
12 | |
Treatment of Class B Shares Held upon Termination of Employment or Acquired Thereafter |
13 | |
Unforeseen Personal Hardship |
13 | |
Section 8. Transfer of Awards |
13 | |
Nontransferability of Awards |
13 | |
Sales of Class B Shares and Restricted Stock to Putnam; Cancellation of Options |
14 | |
Certain Other Permitted Transfers of Class B Shares |
16 | |
Automatic Exchange of Shares or Units |
17 | |
Section 9. Change in Control; Sale by MMC; Public Offering; Special Transaction |
17 | |
Change in Control |
17 | |
Public Offering |
19 | |
Tag-Along Rights |
19 | |
Special Transaction |
21 | |
Section 10. Amendment, Modification, and Termination of the Plan |
22 | |
Amendment, Modification and Termination |
22 | |
Term of Plan; Plan Review |
23 | |
Section 11. Miscellaneous Provisions |
23 | |
Dividends |
23 | |
ii
Beneficiary Designation |
23 |
No Guarantee of Employment or Participation |
23 |
Tax Withholding |
23 |
Indemnification |
23 |
No Limitation on Compensation |
24 |
Securities Laws Compliance |
24 |
Voting Rights |
24 |
Certain Accounting Considerations |
24 |
Governing Law |
24 |
Limitation of Liability |
24 |
Section 409A |
25 |
EXHIBIT A |
A-1 |
EXHIBIT B |
B-1 |
EXHIBIT C |
C-1 |
EXHIBIT D |
D-1 |
EXHIBIT E |
E-1 |
EXHIBIT F |
F-1 |
iii
PUTNAM INVESTMENTS TRUST EQUITY PARTNERSHIP PLAN |
Section 1. Purpose |
The purpose of this Putnam Investments Trust Equity Partnership Plan is to foster and promote the long-term financial success of Putnam and MMC and to increase materially stockholder value by (a) enabling Putnam to attract and retain the services of an outstanding management team upon whose judgment, interest and special effort the successful conduct of its operations is dependent, (b) motivating superior performance by participants in the Plan and (c) providing participants in the Plan with an ownership interest in Putnam.
Section 2. Definitions
(a) Definitions. Whenever used herein, the following terms shall have the respective meanings set forth below:
A. "Accredited Investor" means an "accredited investor" under the individual net worth test set forth in paragraph (a)(5) of Rule 501 ("Rule 501") of Regulation D under the Securities Act of 1933 (the "Securities Act"), the individual net income test set forth in paragraph (a)(6) of Rule 501 or any provision that the Committee may determine is a successor or comparable provision to said paragraphs (a)(5) or (a)(6).
B. "Award Agreement" means an agreement between Putnam and the Participant embodying the terms of any Restricted Stock or Option granted or purchased hereunder, which agreement shall, unless the Committee otherwise determines, be substantially in the form attached hereto as Exhibit A.
C. "Board" means the Board of Trustees of Putnam.
D. "Cause" means misappropriation of assets of Putnam or any Subsidiary, willful misconduct in the performance of the duties of the Participant's position, refusal to perform the duties of the Participant's position, violation of the Participant's Non-Solicitation Agreement or Confidentiality Agreement or other restrictive covenant with Putnam or any Subsidiary, violation of the Putnam Code of Ethics, violation of rules and regulations issued by any regulatory authority, breach of fiduciary duty or breach of trust, willful violation of an important Putnam policy, conviction of a felony, imprisonment for any crime, or any other action likely to bring substantial discredit to Putnam.
E. "Change in Control of MMC" means the first to occur of the following events after the Effective Date:
i) any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than MMC, any trustee or other fiduciary holding securities under an employee benefit plan of MMC or any corporation owned, directly or indirectly, by the stockholders of MMC in substantially the same proportions as their ownership of stock of MMC), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of MMC representing 50% or more of the combined voting power of MMC's then outstanding voting securities; or
ii) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the MMC Board, and any new director (other than a director designated by a person who has entered into an agreement with MMC to effect a transaction described in clause (i), (iii) or (iv) of this Section 2(a)(E)) whose election by the MMC Board or nomination for election by MMC's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or
iii) the stockholders of MMC approve a merger or consolidation of MMC with any other corporation, other than (A) a merger or consolidation that would result in the voting securities of MMC outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) more than 50% of the combined voting power of the voting securities of MMC or such surviving or parent entity outstanding immediately after such a merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of MMC (or similar transaction) in which no "person" (as hereinabove defined) acquired 50% or more of the combined voting power of MMC's then outstanding securities; or
iv) the stockholders of MMC approve a plan of complete liquidation of MMC or an agreement for the sale or disposition by MMC of all or substantially all of MMC's assets (or any transaction having a similar effect).
F. "Change in Control of Putnam" means the first to occur of the following events after the Effective Date:
i) MMC approves a plan of complete liquidation of Putnam or a sale or other disposition of all or substantially all of its assets to an entity of which MMC holds less than 50% of the voting power of securities; or
ii) MMC, together with its subsidiaries, trustees or other fiduciaries holding securities of Putnam under an employee benefit plan maintained by MMC or by a subsidiary of MMC, ceases for any reason (including by reason of a sale or other disposition, including a spinoff or public offering) to be a beneficial owner of securities of Putnam representing more than 50% of the voting power of the securities of Putnam.
G. "Class A Share" means a Class A Common Share, par value $.01 per share, of Putnam.
H. "Class B Share" means a nonvoting Class B Common Share, par value $.01 per share, of Putnam.
I. "Committee" means a committee appointed by the Board that shall consist of two (2) or more members of the Board, including the Chief Executive Officer of Putnam and one (1) or more other members of the Board who shall be appointed and serve at the pleasure of the Board.
J. "Common Shares" means Class A Shares and Class B Shares, collectively.
2 |
K. "Dividends" means dividends payable with respect to Restricted Stock and Class B Shares in accordance with Section 11(a).
L. "Effective Date" means September 30, 1997.
M. "Employee" means any executive or senior officer or other key employee of Putnam or any Subsidiary who is an Accredited Investor or, subject to the determination by the Committee with the approval of the MMC Committee (such determination to occur only in individual isolated situations), who is not an Accredited Investor, but whose designation as an Employee would not cause the issuance of Class B Shares, Restricted Stock or Options under this Plan not to qualify for the exemption from registration provided by Regulation D promulgated under the Securities Act.
N. Fair Market Value means (i) as of any Valuation Date, the fair market value of a Class B share as of such Valuation Date and (ii) as of any date which is not a Valuation Date, the fair market value of a Class B Share as of the preceding Valuation Date, as determined in good faith by the Committee in accordance with the valuation methodology set forth in Exhibit B hereto (which may be modified at any time by the Committee with the approval of the MMC Committee), subject, however, to the following provisions of this Section 2(a)(N).
i) A valuation of the Class B Shares shall be performed reasonably promptly following, and effective as of the last day of each of the four fiscal quarters each year (or the business day immediately preceding either such date if it is not a business day), by a nationally recognized independent valuation firm. For purposes of such valuation, the independent valuation firm will use the fully distributed trading value of Putnam (FDTV) as set forth in Section 3(i) of Exhibit B for calculation of the June 30 Price and the December 31 Price (the Independent Value), and the FDTV as set forth in Section 3(ii) of Exhibit B for calculation of the March 31 Price and the September 30 Price (the Calculated Value).
ii) If, however, both the Committee and the MMC Committee agree that the Independent Value (or a value determined by an independent valuation firm in accordance with Section 2(a)(N)(iii) below) does not fairly represent the Fair Market Value at a particular Valuation Date on which these values are determined, the two committees may jointly choose a second nationally recognized independent valuation firm that will perform its own independent valuation of the Class B Shares (the "Second Independent Value"). If the midpoint of the range of values set forth in the Second Independent Value is within 10% of the midpoint of the range of values set forth in the Independent Value, then the Fair Market Value of a Class B Share as of the applicable Valuation Date shall, for purposes of the Plan, equal the average of the two (2) midpoints described herein. If the midpoint of the range of values set forth in the Second Independent Value is not within 10% of the midpoint of the range of values set forth in the Independent Value, then the MMC Committee shall recommend three (3) other nationally recognized independent valuation firms (and the Committee shall choose one such firm) that shall have the authority to determine which of the midpoints of the two (2) ranges of independent values described herein shall be the Fair Market Value of a Class B Share as of the applicable Valuation Date for purposes of the Plan.
iii) If the Committee believes that the Calculated Value as of a particular Valuation Date fails to incorporate a material change in Putnams business circumstances, or otherwise
3 |
does not fairly represent Putnams current and projected business results, the Committee may, with the approval of the MMC Committee, engage a nationally recognized independent valuation firm to determine the Fair Market Value as of the applicable Valuation Date, using methodology consistent with that set forth in Section 3(i) of Exhibit B.
iv) Notwithstanding the above, if, as of any Valuation Date, no Fair Market Value has been established (as described herein), then, unless otherwise determined by the Committee with the approval of the MMC Committee, there shall be no purchases or sales of Class B Shares or grants of Restricted Stock or Options pursuant to the Plan until such time that a valuation of Class B Shares shall have been finalized.
v) If Putnam at any time subdivides (by any stock split, stock dividend or otherwise) the Class B Shares into a greater number of shares, or combines (by reverse stock split or otherwise) the Class B Shares into a smaller number of shares, the Fair Market Value shall be appropriately adjusted to reflect such subdivision or combination. In the event of any other extraordinary circumstances as a result of which the Fair Market Value needs to be adjusted, such adjustments may be made by the Committee with the approval of the MMC Committee.
vi) For the purpose of determining Fair Market Value in connection with a Change in Control of Putnam, Change in Control of MMC or minority sale of Putnam under Section 9(c) (each, an "Event"), the Fair Market Value shall be determined without regard to the occurrence of such an Event.
vii) Notwithstanding the foregoing, the "Fair Market Value" of a Class B Share on any date on or after the occurrence of a Special Transaction shall equal the closing price per share of the publicly traded class of common stock of Putnam (or, in the case of a Special Transaction, other entity resulting from such Special Transaction) on such date, adjusted for the Discount (as defined in Exhibit B hereto).
O. "Grant Date" means, with respect to any Option, the date on which such Option is granted pursuant to the Plan and, with respect to any Restricted Stock, the date on which such Restricted Stock is granted or sold, as applicable, pursuant to the Plan.
P. "MMC" means Marsh & McLennan Companies, Inc., a Delaware corporation and any successor thereto.
Q. "MMC Board" means the Board of Directors of MMC.
R. "MMC Committee" means the Compensation Committee of the MMC Board.
S. "Non-Solicitation Agreement" shall mean the Non-Solicitation Agreement or any similar agreement or provision in effect from time to time between the Participant and Putnam.
T. "Option" means the right granted pursuant to the Plan to purchase one Class B Share at a price determined in accordance with Section 6(b)(ii).
U. "Participant" means any Employee designated by the Committee, with the approval of the MMC Committee, to participate in the Plan.
4 |
V. "Plan" means the Putnam Investments Trust Equity Partnership Plan, as amended from time to time.
W. "post-Special Termination Exercise Period" means (x) twelve (12) months (or, if shorter, the remaining term of the Option), in case of death or Total Disability, or (y) eighteen (18) months (or, if shorter, the remaining term of the Option), in case of Retirement. The post-Special Termination Exercise Period with respect to a Participant shall terminate immediately upon such Participant's breach of the Non-Solicitation Agreement or Participants breach of any noncompetition agreement between Participant and Putnam.
X. "post-Termination Holding Period" means (x) the twelve-month period immediately following termination of Participant's employment due to death or Total Disability, (y) the twenty-four month period immediately following termination of Participant's employment due to Retirement or (z) the thirty-day period following termination of Participant's employment (in all other circumstances other than a termination for Cause). The post-Termination Holding Period with respect to a Participant shall terminate immediately upon such Participant's breach of the Non-Solicitation Agreement or Participants breach of any noncompetition agreement between Participant and Putnam.
Y. "Public Offering" means the occurrence of any event (including an initial public offering or a partial spinoff, but excluding (1) any event that constitutes a Change in Control of MMC or a Change in Control of Putnam and (2) a Special Transaction) as a result of which shares of Putnam common stock become listed on a national or regional securities exchange or traded over the counter on the Nasdaq Stock Market.
Z. "Putnam" means Putnam Investments Trust, a Massachusetts business trust, and any successor thereto.
AA. "Restricted Stock" means a Class B Share subject to restrictions set forth in the Plan and the applicable Award Agreement.
BB. "Retirement" means a termination of Participant's employment under circumstances that the Committee determines as qualifying as retirement for purposes of the Plan and not inconsistent with the treatment of the Participant under other Putnam plans; provided, however, that as a condition of electing Retirement for purposes of the Plan, a Participant must execute a noncompetition agreement in form and on terms satisfactory to Putnam.
CC. "Special Option Window" means the first five (5) business days of each Window Period, and such other periods as the Committee may designate with the approval of the MMC Committee.
DD. "Special Retention Grant" means a grant of Restricted Stock made for the purpose of providing an incentive for the Participant to continue the Participant's employment with Putnam and specifically designated as a Special Retention Grant by the Committee.
EE. "Special Termination" means termination of a Participant's employment by reason of Participant's death, Total Disability or Retirement.
FF. "Special Transaction" shall mean a business combination involving Putnam with
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another party (other than a Transaction (as defined in Section 9(c)) (i) that is consummated within three (3) years after the Effective Date, (ii) after giving effect to which MMC is the beneficial owner, directly or indirectly, of securities of Putnam (or other entity resulting from such business combination) representing more than 50% of the voting power of the securities of Putnam (or such resulting entity) and (iii) in connection with which the shares of Putnam (or such resulting entity) become listed on a national or regional securities exchange or traded over the counter on the Nasdaq Stock Market. Notwithstanding the above, no transaction will be deemed a Special Transaction unless the value of the other party to such business combination with Putnam exceeds 10% or more of the value of Putnam immediately prior to such business combination. If such party to the business combination does not exceed 10% of the value of Putnam immediately prior to such business combination, such transaction shall be treated as a Public Offering.
GG. "Subsidiary" means any corporation, limited liability company or limited partnership a majority of whose outstanding voting securities is owned, directly or indirectly, by Putnam.
HH. "Total Disability" means a total disability within the meaning of any long-term disability plan maintained for the benefit of the Employee in question or, if the Employee is not covered by such a disability plan, then as determined by the Committee. A person will be considered to have terminated due to "Total Disability" on the first day of his continuous absence from work on account of the disability supporting his certification as having a Total Disability.
II. "Unforeseen Personal Hardship" means financial hardship arising from (i) extraordinary medical expense or other expenses directly related to illness or disability of the Participant, a member of the Participant's immediate family or one of the Participant's parents, (ii) payments necessary or required to prevent the eviction of Participant from Participant's principal residence or foreclosure on the mortgage on that residence or (iii) such other comparable circumstances as determined by the Committee in its discretion. The Committee's reasoned and good faith determination of Unforeseen Personal Hardship shall be binding on Putnam and the Participant.
JJ. "Window Period" means each of (i) the period of not less than ten (10) and not more than twenty (20) consecutive business days designated by the Committee in September of each calendar year commencing in 1998, (ii) the period of not less than ten (10) and not more than twenty (20) consecutive business days designated by the Committee in March of each calendar year commencing in 1998 and (iii) such other periods as the Committee may designate with the approval of the MMC Committee.
KK. Good Reason means, with respect to an Employee, the occurrence of one or more of the following events, without such Employees consent, following a Change in Control of Putnam: (i) any material diminution in such Employees positions, duties, responsibilities or authority immediately prior to such Change in Control of Putnam; (ii) the assignment to such Employee of duties or responsibilities that are inconsistent with such Employees position immediately prior to such Change in Control of Putnam; (iii) any material adverse change to such Employees compensation or benefits structure; (iv) a relocation of Putnams principal executive office to any location outside the Boston metropolitan area or a relocation of such Employees office away from Putnams principal executive office.
(b) Gender and Number. Except when otherwise indicated by the context, words in the masculine gender used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular.
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Section 3. Eligibility and Participation
Participants in the Plan shall be those Employees selected by the Committee with the approval of the MMC Committee. The selection of an Employee as a Participant at any time shall neither entitle such Employee to nor disqualify such Employee from participation in the Plan in the future or from participation in any other award or incentive plan.
Section 4. Administration
(a) Power to Grant. The Committee shall, with the approval of the MMC Committee, determine the Participants to whom Options and Restricted Stock shall be granted or sold and the terms and conditions of any and all Options and Restricted Stock granted or sold to Participants. The Board shall determine whether to repurchase Class B Shares pursuant to the Plan and the terms and conditions of any such repurchase.
(b) Administration. Except as set forth in the Plan, the Committee shall be responsible for the administration of the Plan. Any authority exercised by the Committee under the Plan shall be exercised by the Committee in its sole discretion. Subject to the terms of the Plan and except as set forth in the Plan, the Committee, by majority action thereof, is authorized to prescribe, amend and rescind rules and regulations relating to the administration of the Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interests of Putnam and MMC, and to make all other determinations necessary or advisable for the administration and interpretation of the Plan in order to carry out its provisions and purposes. Except as set forth in the Plan, determinations, interpretations or other actions made or taken pursuant to the provisions of the Plan by the Committee and, where applicable, the Board shall be final, binding and conclusive for all purposes and upon all persons. Notwithstanding the foregoing or any other provision of the Plan, the Committee shall advise the MMC Committee of any determinations, interpretations or any other actions it intends to make or to take pursuant to the provisions of the Plan with respect to Section 8(b)(ii) or Section 9 prior to making any such determination or interpretation or taking other action. In the event the MMC Committee disagrees with such intended determination, interpretation or action, the Committee and the MMC Committee shall negotiate in good faith to arrive at a resolution to such disagreement; failing which the Committee and the MMC Committee shall submit the matter to arbitration under the rules of the American Arbitration Association. Nothing in the Plan shall limit the right of members of the Committee who are Employees to receive awards hereunder.
Section 5. |
Awards Under the Plan |
(a) Types of Awards. Options and Restricted Stock may be granted to Participants under the Plan and Restricted Stock may be sold to Participants under the Plan. Grants of Options may be made in tandem with grants or sales of Restricted Stock or independently.
(b) Number of Class B Shares Subject to Awards. Subject to the provisions of Sections 5(c) and 5(d), the number of Class B Shares (including those subject to Options and Restricted Stock) that may be granted or sold under the Plan shall be equal to, as of the date of any such grant or award, the sum of (1) the product of (a) the sum of the number of (i) 88,000,000, being the original number of Class A Shares under the Plan plus (ii) 3,592,343 Class A Shares issued pursuant to Section 1 of that certain Agreement dated as of July 7, 1999 by and between Putnam and Marsh & McLennan Companies, Inc. (the "Agreement") plus (iii) Class A Shares issued from time to time pursuant to Section 1(b) of the Agreement, and (b) the quotient of 12 divided by 88, plus (2) 4,000,000. Class B Shares to be delivered upon the exercise of Options granted under the Plan and the sale or grant of Restricted Stock under the Plan may consist, in whole or in
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part, of treasury Class B Shares or authorized but unissued Class B Shares.
(c) Cancelled, Terminated or Forfeited Awards. Any Option or Restricted Stock that for any reason is cancelled, terminated or otherwise forfeited, in whole or in part, without having been exercised (including any Class B Shares purchased by Putnam pursuant to Sections 7 or 8), shall again be available for grant under the Plan.
(d) Adjustment in Capitalization. The number of Class B Shares available for issuance upon exercise of Options and upon grant or sale of Restricted Stock under the Plan, the number of Class B Shares subject to outstanding Options, the number of outstanding shares of Restricted Stock and the exercise price of outstanding Options may be adjusted by the Committee, subject to the approval of the MMC Committee, if the Committee shall deem such an adjustment to be necessary or equitable to reflect any dividend, stock split or share combination or any recapitalization, merger, consolidation, exchange of shares, liquidation or dissolution of Putnam or similar corporate event.
(e) Legend. While it is not generally contemplated that certificates be issued, any share certificate representing Class B Shares that may be issued shall bear a legend substantially in the following form:
"Ownership of the shares represented by this certificate is generally restricted to employees of Putnam Investments Trust or its subsidiaries and subject to other restrictions set forth in the Putnam Investments Trust Equity Partnership Plan and in the Declaration of Trust of Putnam Investments Trust. Class B Shares represented by this certificate may not be sold, pledged, mortgaged, encumbered, disposed of or otherwise transferred to any person except Putnam Investments Trust or otherwise in accordance with the provisions of the Putnam Investments Trust Equity Partnership Plan and the Declaration of Trust of Putnam Investments Trust; any other attempt to sell, pledge, mortgage, encumber, dispose of or otherwise transfer these shares will be null, void and of no effect ab initio, will not be recognized by Putnam Investments Trust and will not entitle the purported transferee to any rights of a shareholder or impose any obligations on Putnam Investments Trust either with respect to these shares or the purported transferee. If, however, a court determines that a transfer is nonetheless valid, the shares so transferred will be repurchased from the transferee forthwith at Fair Market Value, as defined in the Putnam Investments Trust Equity Partnership Plan. The Class B Shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities law. Except as required by law or by Section 11(h) of the Putnam Investments Trust Equity Partnership Plan, the holders of Class B Shares shall not be entitled to vote on any matter submitted to the vote of the stockholders of Putnam Investments Trust. Putnam Investments Trust will provide upon request of the Clerk of Putnam Investments Trust a copy of the Putnam Investments Trust Equity Partnership Plan and the Declaration of Trust of Putnam Investments Trust."
Any "book entry" in the records of Putnam evidencing such Class B Shares shall bear a notation of similar effect to the legend set forth above.
Section 6. Terms of Awards
(a) Restricted Stock.
i) Restricted Stock may be granted or sold to Participants at such time or times, in such amounts and for such prices as may be determined by the Committee, subject to the approval of the MMC Committee. Each grant or sale of Restricted Stock shall be evidenced by an Award Agreement that shall specify the number of shares of Restricted Stock, the purchase price, if any, for each share of Restricted
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Stock and such other terms consistent with the Plan as the Committee, subject to the approval of the MMC Committee, shall determine, including customary representations, warranties and covenants with respect to securities law matters and provisions calling for execution by Participant of a General Release of all claims against Putnam (and any of its officers, directors or employees) in form satisfactory to Putnam, and/or forfeiture of all or any portion of Restricted Stock or Class B Shares (or all or any portion of the proceeds from any sales thereof) upon violation of the Participant's Non-Solicitation Agreement or noncompetition agreement between Participant and Putnam. As soon as practicable following the grant of Restricted Stock, or, with respect to purchased Restricted Stock, as soon as practicable following receipt of payment in full of the purchase price of such Restricted Stock, a "book entry" shall be made in the records of Putnam to evidence such award or sale of Restricted Stock. No certificate or certificates representing the Restricted Stock acquired shall be issued to the Participants.
ii) Unless determined otherwise by the Committee with the approval of the MMC Committee, Restricted Stock shall only be sold for a purchase price per share of Restricted Stock equal to the Fair Market Value as of the Grant Date. Subject to all of the terms and conditions of the Award Agreement, the Committee shall establish procedures governing the payment of purchase price for Restricted Stock that is sold under the Plan.
iii) Subject to Sections 7, 8 and 9, and unless otherwise determined by the Committee with the approval of the MMC Committee, all Restricted Stock granted or sold to a Participant at any time shall vest in accordance with the vesting schedule set forth in the applicable Award Agreement, provided that the Committee, subject to the approval of the MMC Committee, may accelerate the vesting of any Restricted Stock, at any time and from time to time. Upon vesting, a share of Restricted Stock ceases to be a share of Restricted Stock and shall be treated, pursuant to the Plan, as a Class B Share.
iv) Within 30 days of the Grant Date, the Participant shall give notice to Putnam if he or she has made an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Stock purchased by or granted to the Participant, and in absence of such notification the Participant shall be deemed to not have made such election. The Participant will be solely responsible for any and all tax liabilities payable by him or her in connection with his or her receipt of the Restricted Stock or attributable to his or her making or failing to make such an election.
v) Special Retention Grants may be made with such terms and conditions as are determined by the Committee to be consistent with the purpose of such grant, subject to the approval of the MMC Committee.
(b) Options.
i) Options may be granted to Participants at such time or times and covering such number of Class B Shares as shall be determined by the Committee, subject to the approval of the MMC Committee, either independently or in tandem with a grant or sale of Restricted Stock. Each Option granted to a Participant shall be evidenced by an Award Agreement that shall specify the exercise price at which a Class B Share may be purchased pursuant to such Option, the duration of such Option and such other terms consistent with the Plan as the Committee, subject to the approval of the MMC Committee, shall determine, including customary representations, warranties and covenants with respect to securities law matters and provisions calling for forfeiture of all or any portion of the Option, all or any portion of the Class B Shares acquired upon exercise thereof, or all or any portion of the proceeds from the cancellation of the Option or from any sales of such Class B Shares upon violation of the Participant's Non-Solicitation Agreement.
ii) Unless determined otherwise by the Committee, with the approval of the MMC
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Committee, the exercise price per Class B Share to be purchased upon exercise of an Option shall be the Fair Market Value as of the Grant Date.
iii) Subject to Sections 7, 8 and 9, Options granted to a Participant shall become exercisable in accordance with the vesting schedule set forth in the applicable Award Agreement; provided that the Committee, subject to the approval of the MMC Committee, may accelerate the exercisability of any Option at any time and from time to time; and provided further that Options may not be exercised during the period commencing with the public announcement of a proposed Public Offering and ending on the earliest of (1) consummation of such Public Offering, (2) abandonment of such Public Offering and (3) the six-month anniversary of such public announcement. Notwithstanding any other provision of the Plan, unless an earlier termination is otherwise prescribed in an Award Agreement, each Option shall terminate on and shall not be exercisable after the tenth anniversary of the Grant Date of such Option.
iv) Options may be exercised only during any Special Option Window or, in accordance with the provisions of Section 7, following the termination of Participant's employment and, unless such condition is waived by the Committee, only if the Participant is an Accredited Investor at the time of such exercise. The Committee shall establish procedures governing the exercise of Options, which procedures shall generally require that written notice of the exercise thereof be given, which notice shall be substantially in the form attached hereto as Exhibit D, and that the exercise price thereof be paid in full in cash or cash equivalents, including by personal check, or, at the Committee's election, by tendering Class B Shares with the aggregate Fair Market Value equal to the exercise price, or by combination of the above at the time of exercise; provided, however, that any Class B Shares so tendered must have been held by the Participant for six (6) months or more following the date of vesting of such shares. As soon as practicable after receipt of a written exercise notice and payment in full of the exercise price of any exercisable Options, a "book entry" shall be made in the records of Putnam to evidence such exercise. No certificate or certificates representing the Class B Shares acquired upon such exercise shall be issued to the Participants.
Section 7. Termination of Employment; Unforeseen Personal Hardship
(a) Special Termination. Unless otherwise determined by the Committee with the approval of MMC (such determination to occur only in individual isolated situations), and except to the extent specified in the applicable Award Agreement, in the event that a Participant's employment with Putnam and the Subsidiaries terminates by reason of a Special Termination:
i) each Option then held by the Participant, whether or not exercisable as of the date of such termination, shall immediately vest and become fully exercisable and shall remain exercisable until expiration of the post-Special Termination Exercise Period (or, if shorter, until expiration of the remaining term of such Option). Any Options held by the Participant that are not exercised prior to expiration of the post-Special Termination Exercise Period (or prior to expiration of the remaining term of such Option, if shorter) shall terminate and be cancelled upon the expiration of such period (or, if shorter, the expiration of the term of such Option);
ii) subject to such conditions as the Committee may prescribe (including (x) Participants execution of a general release of all claims against Putnam (and any of its officers, directors or employees) in form and on terms satisfactory to Putnam, and/or (y) forfeiture of all or any portion of the Class B Shares, or all or any portion of the proceeds from the sale thereof, upon violation of the Participant's Non-Solicitation Agreement or any noncompetition agreement between Participant and Putnam), any Restricted Stock held by the Participant shall be fully vested as of the date of such termination.
(b) Termination for Cause. Unless otherwise determined by the Committee with the approval of
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MMC (such determination to occur only in individual isolated situations), in the event that a Participant's employment with Putnam and the Subsidiaries is terminated for Cause:
i) any Options then held by such Participant (whether or not then exercisable) shall terminate and be cancelled immediately upon such termination of employment;
ii) except as provided in (iii) below, any Class B Shares and Restricted Stock that are then held by such Participant shall terminate and be cancelled immediately upon such termination, and the Participant shall no longer have any rights with respect to such Class B Shares and shares of Restricted Stock;
iii) subject to authorization by the Board and to such conditions as the Committee may prescribe (including (x) Participants execution of a general release of all claims against Putnam (and any of its officers, directors or employees) in form and on terms satisfactory to Putnam, and/or (y) forfeiture of all or any portion of the amounts received pursuant to this clause (iii) upon violation of the Participant's Non-Solicitation Agreement or any noncompetition agreement between Participant and Putnam), with respect to any Class B Shares or Restricted Stock then held by such Participant that relate to shares of Restricted Stock that, as specifically set forth in the applicable Award Agreement, were sold to the Participant ("Purchased Shares"), such Class B Shares or Restricted Stock shall terminate and be cancelled immediately upon such termination in exchange for payment in cash, with respect to each Class B Share or share of Restricted Stock so cancelled, of an amount equal to the lesser of (x) the Fair Market Value as of the date of termination and (y) the purchase price per share paid by the Participant for such Class B Share or share of Restricted Stock (plus interest from the date of purchase at a variable rate equal to the ninety day United States Treasury rate, compounded), and upon such cancellation the Participant shall no longer have any rights with respect to such Class B Shares or shares of Restricted Stock except for the right to receive the payment set forth herein; and
iv) to the extent provided for in the Award Agreement, all or any portion of the proceeds received by the Participant from any sales of Class B Shares or shares of Restricted Stock or from the cancellation of Class B Shares, Restricted Stock or Options shall be returned to Putnam.
(c) Involuntary Termination Other Than for Cause. Unless otherwise determined by the Committee with the approval of MMC (such determination to occur only in individual isolated situations), in the event that a Participants employment with Putnam and the Subsidiaries is terminated by Putnam other than for Cause:
i) each Option then held by the Participant, whether or not exercisable as of the date of such termination, shall immediately vest and become fully exercisable and shall remain exercisable at any time during the thirty (30) days following such termination (or, if shorter, until expiration of the remaining term of such Option).
ii) subject to such conditions as the Committee may prescribe (including (x) Participant's execution of a general release of all claims against Putnam (and any of its officers, directors or employees) in form and on terms satisfactory to Putnam and/or (y) forfeiture of all or any portion of the Class B Shares, or all or any portion of the proceeds from the sale thereof, upon violation of the Participant's Non-Solicitation Agreement or any noncompetition agreement between Participant and Putnam),
(1) any Restricted Stock (except any Restricted Stock granted pursuant to a Special Retention Grant) held by the Participant shall be fully vested as of the date of
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such termination;
(2) of the shares of Restricted Stock held by the Participant which were granted pursuant to a Special Retention Grant, a number equal to the product (rounded down to the nearest whole number) of (A) the quotient of (i) the number of full months of service the Participant completed from the Grant Date to the date of termination, divided by (ii) the total number of months in the applicable vesting period, as set forth in the applicable Award Agreement and (B) the total number of shares of Restricted Stock granted pursuant to a Special Retention Grant, shall become fully vested as of the date of such termination; and
(3) any Restricted Stock held by the Participant granted pursuant to a Special Retention Grant which does not become fully vested according to Section 7(c)(ii)(2) shall terminate and be cancelled immediately upon such termination, and the Participant shall no longer have any rights with respect to such cancelled shares of Restricted Stock, except the right to receive Dividends declared on a date when the Participant was holder of record of such Restricted Stock.
(d) Other Termination of Employment. Unless otherwise determined by the Committee with the approval of MMC (such determination to occur only in individual isolated situations), in the event that a Participant's employment with Putnam and the Subsidiaries is terminated other than in the circumstances described in Sections 7(a) through 7(c) above:
i) each Option held by such Participant, to the extent exercisable as of the date of such termination, may be exercised at any time during the thirty (30) days following such termination (or, if shorter, until expiration of the remaining term of the Option). Each Option held by the Participant, to the extent not exercisable at the date of the Participant's termination of employment, shall terminate and be cancelled immediately upon such termination, and any Options described in the preceding sentence that are not exercised prior to expiration of the applicable period described in such sentence shall terminate and be cancelled upon the expiration of such period;
ii) except as provided in (iii) below, any Restricted Stock that is then held by such Participant shall terminate and be cancelled immediately upon such termination, and the Participant shall no longer have any rights with respect to such shares of Restricted Stock, except the right to receive any Dividends declared on a date when the Participant was holder of record of such Restricted Stock; and
iii) subject to authorization by the Board and to such conditions as the Committee may prescribe (including (x) Participants execution of a general release of all claims against Putnam (and any of its officers, directors or employees) in form and on terms satisfactory to Putnam, and/or (y) forfeiture of all or any portion of the amounts received pursuant to this clause (iii) upon violation of the Participant's Non-Solicitation Agreement or any noncompetition agreement between Participant and Putnam), with respect to any shares of Restricted Stock that relate to Purchased Shares, such Restricted Stock shall terminate and be cancelled immediately upon such termination in exchange for payment in cash, with respect to each share of Restricted Stock so cancelled, of an amount equal to (1) if the termination was by Putnam or its Subsidiaries, the Fair Market Value as of the date of termination, and (2) if the termination was by the Participant, the lesser of (x) the Fair Market Value as of the date of termination and (y) the purchase price per share paid by the Participant for such Restricted Stock (plus interest from the date of purchase at a variable rate equal to the ninety-day United States Treasury rate, compounded). Upon any such cancellation the Participant shall no longer have any rights with respect to such shares of Restricted Stock
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except for the right to receive the payment set forth herein.
(e) Treatment of Class B Shares Held upon Termination of Employment or Acquired Thereafter.
i) If the Participant's employment with Putnam and its Subsidiaries terminates for any reason whatsoever (other than a termination for Cause), Putnam (in the discretion of the Board) shall have an option ("Repurchase Option") to purchase all or less than all of the Class B Shares then held or thereafter acquired by the Participant (or, if his employment was terminated by his death, his estate) at any time following the expiration of the post-Termination Holding Period, upon giving notice in writing to the Participant (or his estate) of its election to exercise such Repurchase Option. Notwithstanding the above, the Repurchase Option may not be exercised by Putnam prior to the date six (6) months following (A) the vesting date of the Class B Shares or (B) date of exercise in the case of Class B Shares acquired upon exercise of Options.
ii) Each Participant may request, in a written notice delivered to the Committee during the post-Termination Holding Period, that Putnam (in the discretion of the Board) purchase all or some of the Class B Shares then held by the Participant, but Putnam shall have no obligation to purchase such Class B Shares. Notwithstanding the above, no Participant may offer to Putnam any Class B Shares that have been held by the Participant for less than six (6) months from the date of vesting of such shares.
iii) So long as the Repurchase Option is exercisable but not exercised as provided herein, the Participant (or his or her estate) shall be entitled to retain or transfer such Class B Shares, subject to all of the provisions of this Plan (including, without limitation, Sections 8 and 9) and the Declaration of Trust of Putnam.
iv) Following any exercise of the Repurchase Option by Putnam, the Participant shall no longer have any rights with respect to the Class B Shares so purchased except for the right to receive the payment set forth herein. All purchases pursuant to this Section 7(d) by Putnam shall be for a purchase price per Class B Share equal to Fair Market Value as of the date of sale and shall be subject to such further conditions as the Committee may prescribe (including forfeiture by the Participant of all or any portion of the amounts received pursuant to this Section 7(d) upon violation of the Participant's Non-Solicitation Agreement).
v) The provisions of this Section 7(d) shall apply only to Class B Shares that have not been forfeited or purchased pursuant to Sections 7(a), (b) and (c) hereof.
(f) Unforeseen Personal Hardship. In the event that a Participant, while in the employment of Putnam or any Subsidiary, experiences Unforeseen Personal Hardship, the Board will carefully consider any request by the Participant that Putnam purchase the Participant's Class B Shares at a price per Class B Share equal to Fair Market Value, but Putnam shall have no obligation to purchase such Class B Shares. The Board shall consider such request with respect to Unforeseen Personal Hardship as soon as practicable after receipt by the Committee of a written request by the Participant, such request to include sufficient details of the Participant's Unforeseen Personal Hardship to permit the Board to review the request and the circumstances in an informed manner, and the Board may prescribe such conditions to Putnam's purchase of such Class B Shares as it deems appropriate.
Section 8. Transfer of Awards
(a) Nontransferability of Awards.
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i) Except as provided in the Plan or as determined by the Committee, neither the Participant nor any of his heirs or representatives shall sell, assign, transfer, pledge or otherwise directly or indirectly dispose of or encumber any of the Options, Restricted Stock or Class B Shares to or with any other person, firm or corporation (including, without limitation, transfers to any other holder of Putnam's capital stock, dispositions by gift, by will and by operation of law) other than a transfer of Options, Restricted Stock or Class B Shares by will or by operation of law to the estate of the Participant upon the death of the Participant, provided that such estate agrees to be bound by all provisions of the Plan and the applicable Award Agreement.
ii) A Participant may not transfer Options, Restricted Stock and Class B Shares, except that, upon the approval of the Committee (such approval to be granted only in individual isolated situations), a Participant may transfer Options, Restricted Stock and Class B Shares to members of such Participant's Immediate Family (as defined below) if the Participant does not receive any consideration for the transfer. "Immediate Family" refers to children, grandchildren and spouse of the Participant or one or more trusts exclusively for the benefit of the Participant and/or such family members or partnerships in which the Participant and/or such family members are the only partners; provided such transfer may not be consummated unless such intended transferee shall have agreed in writing to make and be bound by the representations, warranties and covenants set forth in the Plan and the applicable Award Agreement, pursuant to an instrument of assumption satisfactory in substance and form to Putnam; and provided further that such transferee holds such transferred Options, Class B Shares and Restricted Stock as if no such transfer had occurred. For example, if a Participant transfers Class B Shares pursuant to this Section 8(a)(ii) to his or her child and such Participant is subsequently terminated for Cause, the child must forfeit such transferred Class B Shares in accordance with the terms of the Plan as if the Participant held such Class B Shares at the time of such termination.
iii) If, notwithstanding provisions of the Plan, a court determines that a transfer that is not permitted pursuant to the terms hereof is nonetheless valid, the Class B Shares, Restricted Stock or Options so transferred will be repurchased from the transferee forthwith at a price per Class B Share (or share of Restricted Stock) equal to Fair Market Value (or, in the case of an Option, at a price per Class B Share underlying such Option equal to the excess, if any, of the Fair Market Value over the exercise price per Class B Share of such Option) and in no case will any such transferee have any rights with respect to such Class B Shares, Restricted Stock or Options except for the right to receive the payment set forth herein.
(b) Sales of Class B Shares and Restricted Stock to Putnam; Cancellation of Options.
i) Each Participant may request, in a written notice delivered to the Board during a Window Period, or, in accordance with Section 7, following the termination of a Participant's employment, that Putnam purchase all or some of the Class B Shares then held by the Participant, but Putnam shall have no obligation to purchase such Class B Shares. Notwithstanding the above, no Participant may offer to Putnam any Class B Shares that have been held by the Participant for less than six (6) months from the date of vesting of such shares. All purchases by Putnam pursuant to this Section 8(b)(i) shall be made effective as of the last day of the applicable Window Period or, in the event of termination, as of the date of purchase, shall be for a purchase price per Class B Share equal to Fair Market Value as of the date of the sale and shall be subject to such conditions as the Committee or the Board may prescribe in the Award Agreement or otherwise (including forfeiture of all or any portion of the proceeds of such purchase upon violation of the Participant's Non-Solicitation Agreement).
ii) Putnam may (A) cancel all or some of the Options then held by the Participant in exchange for a payment in cash, with respect to each Option so cancelled, of an amount equal to the number
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of Class B Shares subject to the Option multiplied by the excess, if any, of the Fair Market Value per Class B Share on the date of such cancellation over the exercise price per Class B Share for such Option and (B) cancel all or some of the Class B Shares and shares of Restricted Stock in exchange for a payment in cash, with respect to each Class B Share or share of Restricted Stock so cancelled, of an amount equal to Fair Market Value of a Class B Share on the date of the cancellation; provided, however, that (1) a determination to effect a complete cancellation of Options, Class B Shares and Restricted Stock can be made only (x) if directed by the MMC Committee (in which case the Board shall authorize such complete cancellation) or (y) by the Board (with the approval of the MMC Committee); (2) a determination to effect a partial cancellation of Options, Class B Shares and Restricted Stock can be made only by the Board (with the approval of the MMC Committee); and (3) amounts otherwise payable under this paragraph (ii) may be subject to such conditions (including forfeiture of all or any portion of amounts received pursuant to this paragraph (ii) upon violation of the Participant's Non-Solicitation Agreement or any noncompetition agreement between Participant and Putnam), as may be prescribed in the Award Agreement or otherwise. In the event of a complete cancellation of Options, Class B Shares and Restricted Stock, the Plan shall terminate. It is generally intended that any partial cancellation pursuant to this Section 8(b)(ii) shall be accomplished in a manner calculated, in the Board's sole discretion, to affect all Participants ratably and equitably; provided, however, that nothing herein shall prohibit such cancellation on an individual or any other basis. Notwithstanding the foregoing, if within a twelve-month period immediately following a cancellation pursuant to this Section 8(b)(ii), there occurs a Change in Control of MMC, a Change in Control of Putnam, a Transaction (as defined in Section 9(c) hereof), a Public Offering or a Special Transaction (collectively, an "Event");
(1) in the case of a Change in Control of MMC or a Change in Control of Putnam, each Participant shall be entitled to receive, with respect to each Class B Share, share of Restricted Stock and Option so cancelled, (x) in the case of Class B Shares or shares of Restricted Stock, an additional amount in cash equal to the excess, if any, of the Fair Market Value of a Class B Share on the date of such Change in Control over the Fair Market Value of a Class B Share on the date of cancellation, or, in the case of an Option so cancelled, an additional amount in cash equal to the excess, if any, of the Fair Market Value of a Class B Share on the date of such Change in Control over the higher of the Fair Market Value of a Class B Share on the date of cancellation and the exercise price per Class B Share subject to such Option, and (y) an additional amount in cash equal to the Additional Payment (as defined in Section 9(a) hereof), as if the awards had not been so cancelled, the entitlement to the Additional Payment being subject to the same terms and conditions set forth in said Section 9(a);
(2) in the case of a Transaction, each Participant shall be entitled to receive, with respect to that percentage (equal to the MMC Percentage, as defined in Section 9(c) hereof) of the Class B Shares, shares of Restricted Stock and Options so cancelled, (x) in the case of Class B Shares or shares of Restricted Stock, an additional amount in cash equal to the excess, if any, of the Fair Market Value of a Class B Share as of the date of the Transaction over the Fair Market Value of a Class B Share as of the date of cancellation, or, in the case of an Option so cancelled, an additional amount in cash equal to the excess, if any, of the Fair Market Value of a Class B Share as of the date of the Transaction over the higher of the Fair Market Value of a Class B Share on the date of cancellation and the exercise price per Class B Share subject to such Option, and (y) an additional amount in cash equal to the Additional Tag-Along Payment (as defined in Section 9(c) hereof), as if the awards had not been so cancelled and the Participant had exercised the rights referred to in Section 9(c) hereof, the entitlement to the Additional Tag-Along Payment being subject to the same terms and conditions set forth in said
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Section 9(c);
(3) in the case of a Public Offering, each Participant shall be entitled to receive, with respect to each Class B Share, share of Restricted Stock and Class B Share subject to an Option so cancelled, an additional amount in cash equal to the excess, if any, of the per share price paid in respect of shares of capital stock of Putnam issued or sold in the Public Offering (which price shall be equitably adjusted, to the extent appropriate, by the Committee with the approval of the MMC Committee in the event that the shares of Putnam common stock issued or sold in the Public Offering are not Class A Shares) over (x) in the case of Class B Shares or Restricted Stock so cancelled, the Fair Market Value of a Class B Share as of the date of cancellation and (y) in the case of an Option so cancelled, the higher of the Fair Market Value of a Class B Share as of the date of cancellation or the exercise price per Class B Share subject to such Option; and
(4) in the case of a Special Transaction, each Participant shall be entitled to receive, with respect to that percentage (equal to the Publicly Traded Transaction Percentage, as defined in Section 9(d) hereof) of the Class B Shares, shares of Restricted Stock and Options so cancelled, an additional amount in cash equal to the excess, if any, of the per share price of the shares of capital stock of Putnam issued to the public in connection with the Special Transaction (which price shall be equitably adjusted, to the extent appropriate, by the Committee with the approval of the MMC Committee in the event that the shares of Putnam common stock issued or sold in the Special Transaction are not Class A Shares) over (x) in the case of Class B Shares or Restricted Stock so cancelled, the Fair Market Value of a Class B Share as of the date of cancellation and (y) in the case of an Option so cancelled, the higher of the Fair Market Value of a Class B Share as of the date of cancellation or the exercise price per Class B Share subject to such Option.
iii) Following any receipt of notice from Putnam relating to any cancellation pursuant to Section 8(b)(ii), the Participant shall no longer have any rights with respect to the Class B Shares, Restricted Stock and Options so cancelled, except for the right to receive the payments described herein on the terms and conditions provided herein. All purchases pursuant to this Section 8(b) by Putnam shall be for a purchase price per Class B Share equal to Fair Market Value as of the date of sale.
(c) Certain Other Permitted Transfers of Class B Shares. If a Participant requests that Putnam purchase all or some of the Class B Shares then held by the Participant in accordance with Section 8(b)(i) and Putnam does not purchase the Class B Shares so offered ("Refused Shares") then, during the thirty-day period immediately following the date the Class B Shares were refused by Putnam, the Participant may accept an offer (which must be in writing and for Fair Market Value as of the date that the Class B Shares were refused by Putnam) from, and sell to, any Participant who (unless such condition is waived by the Committee with the approval of the MMC Committee) is then an Accredited Investor and an Employee seeking to purchase all or any part of the Refused Shares. Upon receipt of such offer (and prior to acceptance thereof), the Participant shall give notice in writing to Putnam (i) designating the number of Refused Shares to be sold, (ii) naming the purchaser of such Refused Shares and (iii) specifying the price and terms of the sale; provided such sale may not be consummated unless such intended purchaser shall have agreed in writing to make and be bound by the representations, warranties, covenants and conditions set forth in the Plan and the applicable Award Agreement, pursuant to an instrument of assumption satisfactory in substance and form to Putnam. Any Class B Shares so transferred shall be subject to all of the terms and conditions of the Plan and the applicable Award Agreement, except that the transferee-Participant shall be substituted for the transferor-Participant with respect to any such applicable terms and
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conditions.
(d) Automatic Exchange of Shares or Units. Putnam, by action of the Committee (with the approval of the MMC Committee), may exchange the then Class B Shares and shares of Restricted Stock for shares or units and restricted shares or units, as the case may be, of another entity and substitute shares and units of another entity for Class B Shares subject to options in one or more transactions at one or more times, provided that (x) immediately following each such exchange, the sole assets of such other entity shall be shares of, or other equity interest in, Putnam (or a successor or parent of Putnam) and assets of Putnam (including, without limitation, any right under the Plan, any other equity plan of Putnam, or related to such plans) and (y) the rights of the then holders of Class B Shares and shares of Restricted Stock shall not, in the judgment of the Committee, be materially adversely affected (defined so as to include, without limitation, for purposes of this subsection, being adversely affected under Section 77 of the Massachusetts Business Corporation Law (or any successor statute thereto), as may be in effect or amended from time to time, to the extent such Section would have been applicable to, and as a consequence of its application voting rights would have been granted in connection with, such transaction if a corporate entity incorporated under the laws of the Commonwealth of Massachusetts were engaged in such transaction) as a result of such exchange (it being understood that an exchange (by merger, consolidation or an exchange of units or shares) of units of a business trust for shares of a corporate entity shall not be deemed to have such a material adverse affect as a result of the different entity level taxes to be paid by a business trust and a corporation and that an exchange (by merger, consolidation or an exchange of units and shares) of units of a business trust for shares of a corporate entity incorporated under the laws of the Commonwealth of Massachusetts with terms substantially similar to those set forth in Putnam Investment, Inc.s Articles of Organization in effect on the date shares were first issued pursuant to the Plan and as such terms may have been modified in the declaration of trust of the business trust or under Massachusetts corporate law, shall automatically be deemed to not have such a material adverse affect). Following any such exchange, references in the Plan to Class B Shares or Class A Shares shall be deemed to refer to the shares or units issued in exchange therefor, references in the Plan to shares of Restricted Stock shall be deemed to refer to the shares or units issued in exchange therefor which, following any such exchange, shall remain subject to the restrictions and other terms of the Restricted Stock and references in the Plan to Putnam and the Articles of Organization of Putnam shall be deemed, respectively, to refer to the entity whose shares or units were issued in the exchange and the corresponding sections of the organizational documents of such entity. In addition, following any exchange and in accordance with Section 5(d), all options to purchase Class B Shares shall thereafter be options to purchase shares or units issued in exchange for the Class B Shares. Following any such exchange, the officers of Putnam are authorized and directed to take all appropriate actions to reflect the exchange and the share/unit ownership transfers and issuances effected thereby.
Section 9. Change in Control; Sale by MMC; Public Offering; Special Transaction
(a) Change in Control. In the event of a Change in Control of MMC or a Change in Control of Putnam, subject to such conditions as may be prescribed by the Committee in the Award Agreement or otherwise (including forfeiture of all or any portion of the amounts paid or payable pursuant to this Section 9(a) upon violation of the Participant's Non-Solicitation Agreement):
i) unless otherwise specified in the applicable Award Agreement, all outstanding Options and Restricted Stock shall become fully vested immediately prior to the consummation of either such Change in Control;
ii) all outstanding Options shall be cancelled as of the date of either such Change in Control in exchange for a cash payment by Putnam equal to the amount determined under clause (A) of the first sentence of Section 8(b)(ii) hereof;
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iii) all Class B Shares shall be cancelled as of the date of either such Change in Control in exchange for a cash payment by Putnam equal to the amount determined under clause (B) of the first sentence of Section 8(b)(ii) hereof;
iv) subject to the succeeding provisions of this Section 9(a), each holder of an Option ("Optionee") and each holder of Class B Shares shall be entitled to receive from Putnam, with respect to each Option or Class B Share (as the case may be) then outstanding, an additional cash amount (the "Additional Payment") equal to (A) the product of (I) the number of Class B Shares subject to the Options cancelled hereunder (in the case of an Optionee) or the number of Class B Shares cancelled hereunder (in the case of a holder of Class B Shares) and (II) the excess, if any, of (1) the per share price payable in respect of Class A Shares in connection with a Change in Control of Putnam (or, in the event of a Change in Control of MMC, the "fully distributed trading value" of a Class B Share as of the date of such Change in Control, determined in accordance with Exhibit B hereof) over (2) in the case of a Class B Share so cancelled, the Fair Market Value of such Class B Share as of the date of the applicable Change in Control, and in the case of an Option so cancelled, the higher of the Fair Market Value of a Class B Share as of the date of the applicable Change in Control and the exercise price per Class B Share subject to such Option, plus or minus (B) any earnings or losses (as hereinafter described) on the amount determined under (A) above; and
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the Plan shall terminate. |
Unless otherwise specified in the applicable Award Agreement, the rights of an Optionee or a holder of Class B Shares to the Additional Payment shall vest and be paid at the rate of 33.33% on each of the first three anniversaries of the applicable Change in Control if such Optionee or holder of Class B Shares remains continuously employed with Putnam or any of its Subsidiaries or affiliates and any nonvested amounts shall be forfeited upon the Optionee's or Class B Share holder's termination of employment for any reason; provided, however, that, in the event of a Special Termination or an involuntary termination without Cause (in either case, determined in the manner in effect immediately prior to the applicable Change in Control), the Optionee's or Class B Share holder's rights to the Additional Payment shall fully vest and be paid. Any Additional Payment forfeited by a Participant shall revert to Putnam. Upon occurrence of either such Change in Control, Putnam shall establish one or more grantor trusts and promptly contribute thereto the aggregate amount described in clause (iv)(A) above in respect of each Optionee and holder of Class B Shares. Such grantor trust shall permit each such Optionee and holder of Class B Shares to direct the investment of funds held for his benefit in the trust among the various Putnam funds and such other investments as may be designated by the Committee.
Notwithstanding the foregoing, if and to the extent specified in the applicable Award Agreement, (I) the provisions of Section 9(a)(i) shall not apply, (II) the provisions of Sections 9(a)(ii), 9(a)(iii) and 9(a)(iv) shall apply solely with respect to Options vested immediately prior to the Change in Control and/or Class B Shares, and (III) any unvested Options and/or shares of Restricted Stock shall be forfeited and revert to Putnam; provided, however, subject to the terms of the applicable Award Agreement, each holder of an Option or Restricted Stock not vested immediately prior to the consummation of such Change in Control shall be entitled to receive from Putnam (1) with respect to each such unvested Option then outstanding, a cash amount (the Unvested Option Payment) equal to the excess, if any, of (x) the per share price payable in respect of Class A Shares in connection with a Change in Control of Putnam (or, in the event of a Change in Control of MMC, the Fully Distributed Trading Value of a Class B Share as of the date of such Change in Control, determined in accordance with Exhibit B of the Plan) over (y) the exercise price per Class B
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Share subject to such Option and (2) with respect to each such unvested share of Restricted Stock then outstanding, a cash amount (the Unvested Share Payment) equal to the per share price payable in respect of Class A Shares in connection with a Change in Control of Putnam (or, in the event of a Change in Control of MMC, the Fully Distributed Trading Value of a Class B Share as of the date of such Change in Control, determined in accordance with Exhibit B of the Plan).
(b) Public Offering. Upon a Public Offering, subject to such conditions as may be prescribed by the Committee in the Award Agreement or otherwise (including (x) Participants execution of a general release of all claims against Putnam (and any of its officers, directors of employees) in form and on terms satisfactory to Putnam, and/or (y) forfeiture of all or any portion of the amounts paid or payable pursuant to this Section 9(b) upon violation of the Participant's Non-Solicitation Agreement or any noncompetition agreement between Putnam and Participant):
i) in accordance with Section 4.2.6 of the Declaration of Trust of Putnam, each Class B Share and each share of Restricted Stock shall be converted into one Class A Share;
ii) all Restricted Stock shall remain subject to the same vesting schedule and other terms and conditions as were in effect immediately prior to such Public Offering. In addition, all Class A Shares issued pursuant to clause (i) above shall be subject to such customary transfer restrictions as shall be reasonably required by the managing underwriter of such Public Offering;
iii) each Option that is outstanding immediately prior to such Public Offering shall be converted into an Option for that number of Class A Shares equal to the number of Class B Shares subject to such Option, at an exercise price equal to the exercise price of such Option immediately prior to the Public Offering. With respect to any Option (or portion of an Option) that is vested immediately prior to the Public Offering, such Option (or such portion of an Option) shall be otherwise subject to the same terms and conditions to which such Option (or such portion of an Option) was subject immediately prior to the Public Offering. Unless otherwise specified in the applicable Award Agreement, with respect to any Option (or a portion of an Option) that is not vested immediately prior to the Public Offering, such Option (or such portion of an Option) shall vest with respect to 25% of shares subject thereto on each of the first, second, third and fourth anniversaries of the Public Offering and shall be otherwise subject to the same terms and conditions to which such Option (or such portion of an Option) was subject immediately prior to the Public Offering;
iv) holders of vested Class A Shares resulting from the conversion described herein shall be entitled to such registration rights as may be deemed appropriate by the Committee with the approval of the MMC Committee; provided however, nothing contained herein shall limit the rights of such holders to sell their vested Class A Shares pursuant to Rule 144 promulgated under the Securities Act; and
v) if a Public Offering occurs in connection with a Transaction, then, first, the applicable provisions of Section 9(c) will apply and then, with respect to any Class B Shares, Restricted Stock or Options held by the Participant following the application of such provisions, this Section 9(b) shall apply.
(c) Tag-Along Rights. If MMC determines to sell any of the Class A Shares owned by it to a
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person or entity other than MMC, Putnam, a subsidiary of one of them, a trustee or other fiduciary holding securities of Putnam under an employee benefit plan maintained by MMC or Putnam, or by a subsidiary of one of them, or an employee, trustee or director of MMC or Putnam, in a transaction ("Transaction") that, if consummated, would not constitute a Change in Control of Putnam, a Public Offering or a Special Transaction, then, subject to such conditions as may be prescribed by the Committee in the Award Agreement or otherwise (including (x) Participants execution of a general release of all claims against Putnam (and any of its officers, directors or employees) in form and on terms satisfactory to Putnam, and/or (y) forfeiture of all or any portion of the amounts paid or payable pursuant to this Section 9(c) upon violation of the Participant's Non-Solicitation Agreement or any noncompetition agreement between Putnam and Participant), the Participant may give written notice (such notice to be given by a Participant within twenty-one (21) days of being advised of the Transaction) to the Committee of his desire:
i) to sell to Putnam in connection with the Transaction such percentage of the aggregate number of Class B Shares and shares of Restricted Stock held by the Participant at such time (rounded to the nearest whole share) as equals the percentage that the Class A Shares proposed to be sold by MMC in such Transaction bears to the total number of Class A Shares held by MMC immediately prior to the Transaction (the "MMC Percentage"), such sale to be effected at a price per share equal to the Fair Market Value of a Class B Share as of the date of the Transaction and otherwise on materially the same terms and conditions as are applicable to Class A Shares sold by MMC (with Class B Shares being sold prior to the sale of any shares of Restricted Stock and any shares of Restricted Stock so sold becoming fully vested and no longer subject to restrictions); and/or
ii) to cancel (as of the date of such Transaction) such percentage of each Option granted to such Participant that is outstanding immediately prior to such Transaction (rounded to the nearest whole share) as equals the MMC Percentage, such cancellation to be in exchange for a cash payment from Putnam equal to the product of (A) the number of shares then subject to such Option, (B) the MMC Percentage and (C) the excess, if any, of the Fair Market Value per Class B Share on the date of cancellation over the exercise price per Class B Share for such Option (and Putnam and MMC shall take all actions necessary to implement the Participant's elections upon consummation of the Transaction).
Subject to the provisions of the following sentence, (I) each holder of Class B Shares and shares of Restricted Stock who elects to sell the applicable percentage of such shares, as described in clause (i) above, shall be entitled to receive from Putnam an additional cash payment equal to (A) the number of Class B Shares and shares of Restricted Stock sold hereunder multiplied by (B) the excess, if any, of (i) the per share price payable in respect of Class A Shares in connection with such Transaction over (ii) the Fair Market Value of a Class B Share as of the date of such Transaction, and (II) each Optionee who elects to have a percentage of his Options cancelled, as described in clause (2) above, shall be entitled to receive from Putnam an additional cash payment with respect to each Class B Share subject to an Option or portion of an Option so cancelled, equal to the excess, if any, of (i) the per share price payable in respect of Class A Shares in connection with the Transaction over (ii) the higher of the Fair Market Value of a Class B Share as of the date of such cancellation and the exercise price per Class B Share subject to such Option or portion of an Option (the additional payments referred to in clause (I) or (II), as the case may be, plus or minus earnings and losses thereon, as hereinafter described, being referred to herein as the "Additional Tag-Along Payment"). The rights of an Optionee or a holder of Class B Shares (or shares of Restricted Stock) to the Additional Tag-Along Payment shall vest at the rate of 33.33% on each of the first three anniversaries of the Transaction if such Optionee or holder of Class B Shares (or shares of Restricted Stock) remains
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continuously employed with Putnam or any of its Subsidiaries or affiliates and any nonvested amounts shall be forfeited upon the termination of employment of such Optionee or holder of Class B Shares (or shares of Restricted Stock) for any reason; provided, however, that in the event of a Special Termination or an involuntary termination without Cause (in either case, determined in the manner in effect immediately prior to the Transaction), the rights of such Optionee or holder of Class B Shares (or shares of Restricted Stock) to the Additional Tag-Along Payment shall become fully vested. Any Additional Tag-Along Payment forfeited by a Participant shall revert to Putnam. Upon occurrence of the Transaction, Putnam shall establish one or more grantor trusts and promptly contribute thereto an amount equal to the aggregate amount set forth in clauses (I) and (II) above. Such grantor trust shall permit each such Optionee and holder of Class B Shares (or shares of Restricted Stock) to direct the investment of funds held for his benefit in the trust among the various Putnam funds and such other investments as may be designated by the Committee. Notwithstanding anything to the contrary contained in this Section 9(c), any and all Class B Shares and shares of Restricted Stock that are not sold pursuant to this Section 9(c), and any and all Options that are not cancelled pursuant to this Section 9(c), shall remain outstanding in accordance with their respective terms and the terms of this Plan. If for any reason MMC does not consummate the proposed Transaction, the provisions of this Section 9(c) shall cease to apply with respect to such proposed Transaction, provided that such provisions shall again apply to any subsequently proposed Transaction.
(d) Special Transaction. In the event of a Special Transaction, subject to such conditions as may be prescribed by the Committee in the Award Agreement or otherwise (including (x) Participants execution of a general release of all claims against Putnam (and any of its officers, directors or employees) in form and on terms satisfactory to Putnam, and/or (y) forfeiture of all or any portion of the amounts paid or payable pursuant to this Section 9(d) upon violation of the Participant's Non-Solicitation Agreement or any noncompetition agreement between Participant and Putnam):
i) a percentage of the Class B Shares and a percentage of the shares of Restricted Stock held by each Participant that is equal to (i) the number of shares of common stock of Putnam issued to the public in connection with the Special Transaction (which number of shares shall be equitably adjusted, to the extent appropriate, by the Committee with the approval of the MMC Committee in the event that the shares of Putnam common stock issued to the public are not Class A Shares) divided by (ii) the total number of Class A Shares, Class B Shares, shares of Restricted Stock and Class B Shares subject to Options outstanding immediately prior to the Special Transaction (the "Publicly Traded Special Transaction Percentage") shall be converted into Class A Shares (rounded to the nearest whole share). Each share of Restricted Stock remaining shall be subject to the same vesting schedule and other terms and conditions as were in effect immediately prior to such conversion and each Class B Share remaining shall be subject to the same terms and conditions as were in effect immediately prior to such conversion;
ii) a percentage of each Option that is outstanding immediately prior to such Special Transaction equal to the Publicly Traded Special Transaction Percentage shall be converted into an option for the number of Class A Shares, rounded to the nearest whole share, equal to the number of the Class B Shares that was previously subject to such percentage of each such Option, at an exercise price equal to the exercise price of such Option immediately prior to the Special Transaction. With respect to any Option (or portion of an Option) that is vested immediately prior to the Special Transaction, such Option (or such portion of an Option) shall be otherwise subject to the same terms and conditions to which such Option (or such portion of an Option) was subject immediately prior to the Special Transaction. With respect to any Option (or a portion of an Option) that is not vested immediately prior to the Special Transaction, such Option (or such portion of an Option) shall vest with respect to 25% of the shares subject thereto on each of the first, second, third and fourth anniversaries of the Special Transaction and shall be otherwise subject to the same terms and conditions to which such Option (or such portion of an Option) was subject immediately prior to the Special Transaction; and
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iii) holders of vested Class A Shares resulting from the conversion described herein shall be entitled to such registration rights as may be deemed appropriate by the Committee with the approval of the MMC Committee; provided, however, nothing contained herein shall limit the rights of such holders to sell their vested Class A Shares pursuant to Rule 144 promulgated under the Securities Act.
As soon as practicable following consummation of the Special Transaction, the Committee (or the Committee of the resulting entity) and the MMC Committee shall conduct a formal review of the Plan with a view toward adopting an amended, new or successor plan (the "New Plan"). Upon the adoption of such New Plan, no additional awards will be made under this Plan, but any awards previously granted pursuant to this Plan shall remain subject to the terms and conditions of this Plan. If, however, by the third anniversary of the Special Transaction, the Committee and the MMC Committee are unable to agree to the adoption of the New Plan, then
(1) each Class B Share and each share of Restricted Stock shall be converted into one (1) Class A Share;
(2) all Restricted Stock shall remain subject to the same vesting schedule and other terms and conditions as were in effect immediately prior to such third anniversary;
(3) each Option that is outstanding immediately prior to such third anniversary shall be converted into an Option for that number of Class A Shares equal to the number of Class B Shares subject to such Option, at an exercise price equal to the exercise price of such Option immediately prior to such third anniversary and otherwise subject to the same terms and conditions as such Option was subject to immediately prior to the Public Offering; and
(4) holders of vested Class A Shares resulting from the conversion described herein shall be entitled to such registration rights as may be deemed appropriate by the Committee with the approval of the MMC Committee; provided however, nothing contained herein shall limit the rights of such holders to sell their vested Class A Shares pursuant to Rule 144 promulgated under the Securities Act.
Section 10. Amendment, Modification, and Termination of the Plan
(a) Amendment, Modification and Termination. The MMC Committee at any time may terminate or suspend the Plan, and the Committee (with the approval of the MMC Committee) may from time to time amend or modify the Plan. No right of the MMC Committee under this Plan may be amended in absence of approval of the MMC Committee of such amendment. No amendment, modification, termination or suspension of the Plan shall in any manner materially adversely affect any award theretofore granted under the Plan; provided, however, that notwithstanding the above, the MMC Committee may amend, modify, terminate or suspend the Plan in any manner if such amendment, modification, termination or suspension is approved by holders of not less than 75% of the outstanding Class B Shares, shares of Restricted Stock and Class B Shares subject to Options (in each case, whether or not vested) who vote with respect to such amendment, modification, termination or suspension; provided further that the Committee (with the approval of the MMC Committee) may amend the Plan at any time without any such consent to the extent necessary to ensure compliance with tax, securities or any other applicable laws; and provided further that the MMC Committee, after consultation with the Committee, may amend the Plan and the terms of any outstanding shares of Restricted Stock, Class B Shares or Options, at any time and to the extent necessary,
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in the opinion of MMC's independent public accountants, to insure (while maintaining, to the extent practical, the economic and other rights of the holders of Class B Shares, Restricted Stock and Options) that the Plan and the Class B Shares, Restricted Stock and Options continue to qualify for "fixed accounting" under United States generally accepted accounting principles.
(b) Term of Plan; Plan Review. The Plan shall be effective as of the Effective Date. The Plan shall continue in effect unless terminated in accordance with Section 10(a). The provisions of the Plan, however, shall continue thereafter to govern all outstanding Options, Restricted Stock and Class B Shares theretofore acquired by Participants pursuant to the Plan. During 2007, the Committee and the MMC Committee shall conduct a formal review of the Plan to determine its continued appropriateness.
Section 11. Miscellaneous Provisions
(a) Dividends. In accordance with Section 4.2.3 of the Declaration of Trust of Putnam, a Participant shall have the right to receive such dividends per share with respect to the Participant's Restricted Stock and Class B Shares as are declared from time to time per share with respect to Class A Shares, except that (i) Restricted Stock and Class B Shares issued prior to January 1, 1998, shall not be entitled to any dividends declared or paid on or prior to December 31, 1997, (ii) dividends payable with respect to Class A Shares in additional Class A Shares, shall be payable with respect to Class B Shares in additional Class B Shares, (iii) Putnam may pay dividends on Class A Shares without paying a dividend on the Class B Shares provided such dividend is approved by holders of not less than 75% of the outstanding Class B Shares and shares of Restricted Stock who vote with respect to such proposed dividend payment and (iv) Putnam may pay dividends on shares of Class A Common Stock payable in additional shares of Class A Common Stock without paying a dividend on the Class B Shares and Restricted Stock provided that the dividend, liquidation and conversion rights of the Class B Shares and Restricted Stock are equitably adjusted, including by amendment to the Plan pursuant to Section 10(a) hereof, if appropriate, so that the economic and other rights of the Class B Shares and Restricted Stock are not adversely affected. The foregoing notwithstanding, the Committee may provide for optional or mandatory deferral of any cash dividends with respect to Restricted Stock, provided that no additional shares of Restricted Stock become issuable. The Participant shall not have a right to receive dividends with respect to any Options.
(b) Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries (who may be named contingently or successively) by whom any right under the Plan is to be exercised in case of his death. Each designation will revoke all prior designations by the same Participant, shall be in a form reasonably prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during his lifetime.
(c) No Guarantee of Employment or Participation. Nothing in the Plan or the Award Agreement shall interfere with or limit in any way the right of Putnam, MMC or any Subsidiary to terminate any Participant's employment at any time, or confer upon any Participant any right to continue in the employ of Putnam, MMC or any Subsidiary. No Employee shall have a right to be selected as a Participant or, having been so selected, to receive or purchase any Options or Restricted Stock.
(d) Tax Withholding. Putnam or the Subsidiary employing a Participant shall have the power to withhold, or to require such Participant to remit to Putnam or such Subsidiary, subject to such other arrangements as the Committee may make, an amount sufficient to satisfy all federal, state, local and foreign withholding tax requirements in respect of any Option or Restricted Stock granted or sold under the Plan.
(e) Indemnification. Each person who is or shall have been a member of the Committee or of the Board or of the MMC Committee shall be indemnified and held harmless by Putnam to the fullest extent
23 |
permitted by law from and against any and all losses, costs, liabilities and expenses (including any related attorneys' fees and advances thereof) in connection with, based upon or arising or resulting from any claim, action, suit or proceeding to which he may be made a party or in which he may be involved by reason of any action taken or failure to act under the Plan and from and against any and all amounts paid by him in settlement thereof, with Putnam's approval, or paid by him or her in satisfaction of any judgment in any such action, suit or proceeding against him or her, provided that he or she shall give Putnam an opportunity, at its own expense, to defend the same before he or she undertakes to defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such persons may be entitled under Putnam's Declaration of Trust or By-laws, by contract, as a matter of law or otherwise.
(f) No Limitation on Compensation. Nothing in the Plan shall be construed to limit the right of Putnam, MMC or any Subsidiary to establish other plans or to pay compensation to its employees, in cash or property, in a manner that is not expressly authorized under the Plan.
(g) Securities Laws Compliance. The granting of Options, the granting or sale of Restricted Stock and the issuance of Class B Shares shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. No Options shall be granted under the Plan, and no Class B Shares or Restricted Stock shall be issued under the Plan, if such grant, sale or issuance would result in a violation of applicable law, including the federal securities laws and any applicable state securities laws.
(h) Voting Rights. Except as otherwise required by law or by this Plan, no Participant holding any Options granted under the Plan shall have any right, in respect of such Options, to vote on any matter submitted to Putnam's stockholders. Except as otherwise required by law or provided below, no Participant holding any Restricted Stock granted or sold under the Plan or any Class B Shares acquired pursuant to the Plan shall have any right, with respect to such Restricted Stock or Class B Shares, to vote on any matter submitted to Putnam's stockholders. Notwithstanding the above, at such time as requested by the MMC Committee, the Board shall take all steps as may be necessary to amend the Declaration of Trust so that each Class B Share shall be entitled to one-tenth of one vote per share (or such other voting rights as may be determined by the MMC Committee) and to vote together with the Class A Shares on all matters on which shareholders are generally entitled to vote. In approving any such amendments to the Declaration of Trust, only the holders of Class A Shares shall be entitled to vote, except to the extent holders of Class B Shares have been granted voting rights prior thereto.
(i) Certain Accounting Considerations. The Options and Restricted Stock granted or sold pursuant to the Plan are intended to be subject to "fixed accounting" under the United States Generally Accepted Accounting Principles and shall be so interpreted to the extent such interpretation is consistent with the purpose of the provisions being so interpreted.
(j) Governing Law. The Plan, and all agreements thereunder, shall be construed in accordance with and governed by the laws of the Commonwealth of Massachusetts.
(k) Limitation of Liability. To the extent that Putnam is a business trust, the shareholders, trustees, officers, employees or agents of the trust, in their capacity as such, shall not be personally liable for any claims arising against the business trust related to the business trusts obligations or duties under the Plan and all Participants and other parties to the Plan shall look solely to the Trust Estate (as such term is defined in the Declaration of Trust for the trust) for the payment of any claim arising against the business trust related to the business trusts obligations or duties under the Plan or for the performance of any obligations of the business trust under the Plan. Notwithstanding the foregoing, Participants and other parties to the
24 |
Plan shall remain liable for any claims related to their individual obligations, duties and performance imposed by the Plan.
(l) Section 409A. Notwithstanding anything herein to the contrary, this Plan and any Award Agreement hereunder shall be interpreted or if necessary amended, in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended, to the extent subject thereto.
25 |
EXHIBIT A
RESTRICTED STOCK AND OPTION AWARD AGREEMENT
This Restricted Stock and Option Award Agreement (the "Award Agreement") is executed and delivered as of the Grant Date by and between Putnam Investments Trust ("Putnam") and the undersigned Participant (Participant). The Participant and Putnam hereby agree as follows:
1. |
Putnam, pursuant to the Putnam Investments Trust Equity Partnership Plan (the "Plan"), which is incorporated herein by reference, and subject to the terms and conditions thereof, hereby grants to the Participant an award of Restricted Stock and hereby grants to the Participant an Option to purchase Class B Shares. |
2. |
Certain general terms relating to the award of Restricted Stock and Options are set forth in the Plan, and certain specific terms relating to this Award Agreement are set forth in the attached certificate. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. |
3. |
The exercise price of Options may be paid in full in cash or cash equivalents, including by personal check, or by tendering fully vested Class B Shares with an aggregate Fair Market Value equal to the exercise price, or by combination of the above at the time of exercise; provided, however, that any Class B Shares so tendered must have been held by the Participant for six months or more following (A) the vesting date of such Class B Shares or (B) the date such Class B Shares were acquired upon the exercise of fully-vested Options. |
4. |
The Participant agrees to comply with and be bound by all the terms and conditions contained in the Non-Solicitation Agreement (the "Non-Solicit Agreement") by and between Participant and Putnam, which is incorporated herein by reference. The Participant acknowledges that his or her compliance with the Non-Solicit Agreement or any noncompetition agreement between Participant and Putnam is a condition of participation in the Plan, and that upon violation by the Participant of the Non-Solicit Agreement or any such noncompetition agreement, Putnam shall be entitled to relief including, but not limited to, the following: (a) forfeiture of all or any portion of the Restricted Stock then held by the Participant; (b) cancellation and termination of all or any portion of the outstanding Options then held by the Participant (whether or not then exercisable); (c) forfeiture of all or any portion of the Class B Shares then held by the Participant; (d) forfeiture of all rights with respect to other payments to which Participant may become entitled pursuant to the Plan; (e) repayment of 50% of all amounts previously received by the Participant upon repurchase by Putnam of Class B Shares and upon cancellation by Putnam of Options pursuant to the Plan; and (f) repayment of 50% of all other cash payments received by the Participant from Putnam pursuant to the Plan. Participant further understands and agrees that, as set forth in the Plan, as a condition of participation in the Plan or eligibility for certain benefits thereunder, Participant may be required to execute (x) a general release of all claims against Putnam (and any of its officers, directors or employees), and/or (y) a noncompetition agreement, in each case in form and on terms satisfactory to Putnam. |
5. |
Any notice by the Participant to Putnam hereunder, including written notice of the exercise of |
A-1 |
Options, which notice shall be substantially in the form attached to the Plan as Exhibit D, shall be in writing and shall be deemed duly given only upon receipt thereof by Putnam, c/o the Committee, at its principal office. Any notice by Putnam to the Participant shall be in writing and shall be deemed duly given if mailed to the Participant at the address last specified to Putnam by the Participant.
6. |
The validity and construction of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. |
7. |
The Participant represents and warrants to Putnam as follows (check one): |
__ |
The Participant is an "accredited investor" under the net worth test set forth in paragraph (a)(5) of Rule 501 of Regulation D of the Securities Act of 1933, as amended (the "Securities Act"), in that Participant has an individual net worth, or joint net worth with the Participant's spouse, at the time of the grant of the award which exceeds $1,000,000. |
__ |
The Participant is an "accredited investor" under the net income test set forth in paragraph (a)(6) of Rule 501 of Regulation D under the Securities Act in that the Participant had an individual income in excess of $200,000 in each of the two most recent years or joint income with the Participant's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. |
__ |
The Participant is not an accredited investor, as described above. |
8. |
The Participant further represents and warrants to Putnam as follows: |
(a) |
The Participant is acquiring Class B Shares hereunder, and any Class B Shares acquired pursuant to the exercise of Options granted hereunder will be acquired, solely for investment and not with a view toward or for resale, or with any intention of distributing or selling Class B Shares in violation of the Securities Act, the Plan, this Award Agreement, or the Declaration of Trust of Putnam, and the Participant will not sell or offer to sell or otherwise transfer Class B Shares in violation of the Securities Act, the Plan, this Award Agreement, or the Declaration of Trust of Putnam. |
(b) |
The Participant acknowledges that the Participant has been provided an opportunity to examine all documents and ask questions of, and has received answers thereto from Putnam and its representatives regarding the business, management, and financial affairs of Putnam and its subsidiaries, and the Participant has obtained all information requested by him or her of Putnam and its subsidiaries with respect to the acquisition of Class B Shares. |
(c) |
The Participant has reviewed the terms and conditions of the Plan and the Confidential Memorandum, dated March 15, 2005, provided to the Participant by Putnam, as supplemented through the date of this Award Agreement, and the Participant has conducted his or her own examination of Putnam, the offering of Class B Shares, the grating of Options and the Plan, including the merits and risks involved, in making an investment decision with respect to Class B Shares. The Participant represents that the offering of Class B Shares was made only through direct, personal communication |
A-2 |
between the Participant and Putnam and its representatives and not through public solicitation or advertising.
(d) |
The Participant understands that (i) Class B Shares have not been registered under the Securities Act, in reliance on an exemption from the registration requirements of the Securities Act pursuant to Section 4(2) thereof; (ii) Putnam has no obligation to register Class B Shares under the Securities Act or any state securities laws; (iii) Class B Shares are subject to strict restrictions on transferability and may only be transferred in accordance with the Plan, this Award Agreement, the Declaration of Trust of Putnam and the Securities Act; (iv) the certificates, if any, representing shares of Class B Shares will bear a legend to such effect, and (v) Putnam will make a notation on its transfer books to such effect. |
(e) |
The Participant is able to bear the economic risk of an investment in Class B Shares and has adequate income independent of any income produced from an investment in Class B Shares to sustain a loss of all of his or her investment in Class B Shares without economic hardship if such loss should occur. |
(f) |
The Participant understands and acknowledges that Putnam will be relying on the Participant's representations and warranties set forth herein in the offering of Class B Shares and the granting of Options to the Participant. |
(g) |
The Participant will provide any information reasonably requested by Putnam to enable Putnam to file a Form D with the Securities and Exchange Commission under the Securities Act. |
* * *
This Award Agreement is made under and subject to the provisions of the Plan referred to herein, the provisions of which Plan are incorporated in this Award Agreement by reference. By signing this Award Agreement, the Participant accepts and agrees to comply with and be bound by all of the foregoing terms and provisions and all of the terms and provisions of the Plan, and confirms that he or she has received the Confidential Memorandum dated March 15, 2005, relating to the Plan, as supplemented through the date of this Award Agreement.
IN WITNESS WHEREOF, Putnam has caused this Award Agreement to be executed by a duly authorized representative and the Participant has hereunto set his hand as of the Grant Date.
PUTNAM INVESTMENTS TRUST:
By:_________________________________________
Name: | |
Title: |
|
____________________________________________
Participant
A-3 |
RESTRICTED STOCK AND OPTION AWARD CERTIFICATE
Name of Participant: |
Participant |
Grant Date: |
September 29, 2005 |
Restricted Stock: |
Participant is hereby granted _____ Class B Shares. |
Fair Market Value per Share: |
$ |
Dates Stock Vests*: |
[#] Shares on September 1, 2006, |
|
[#] Shares on September 1, 2007, |
|
[#] Shares on September 1, 2008, |
|
[#] Shares on September 1, 2009. |
Options: |
Participant is hereby awarded the option to purchase __ Class B Shares. |
Exercise Price per Share: |
$ |
Expiration Date of Option: |
September 29, 2011 |
Dates Option Vests* and |
[#] Shares on September 1, 2006, |
may be Exercised: |
[#] Shares on September 1, 2007, |
|
[#] Shares on September 1, 2008, |
|
[#] Shares on September 1, 2009. |
* Vesting is subject to continuous employment as described in the Plan and the Confidential Memorandum dated March 15, 2005, as supplemented through the date of this Award Agreement. In the event of a Public Offering, any Options (or portions of such Options) which are unvested as of the date immediately prior to such Public Offering shall vest with respect to 25% of the shares subject thereto on each of the first, second, third and fourth anniversary of any such Public Offering.
A-4 |
EXHIBIT B
Valuation Methodology
to Determine the
Fair Market Value
of Class B Stock
The methodology for determining the Fair Market Value of a Class B Share ("FMV") as of a particular date (the "Valuation Date") shall be as follows (any capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan):
1. FMV = the fully distributed trading value of a Class B Share as of the Valuation Date (the "FDTV"), adjusted for the Discount.
2. Discount = a 30% discount representing the illiquidity and restrictions on transfers of the Class B Shares.
3. FDTV =
(i) |
For the last day of the second fiscal quarter (the June 30 Price) and the last day of the fourth fiscal quarter (the December 31 Price), the value of 100% of Putnam as the midpoint of the range of values determined by a nationally recognized independent valuation firm chosen by the Committee with the approval of the MMC Committee, in accordance with guidelines set forth in Exhibit C. |
(ii) |
For the last day of the first fiscal quarter (the March 31 Price) and the last day of the third fiscal quarter (the September 30 Price), the prior quarter-end Putnam P/E (prior quarter-end FDTV divided by prior quarter-end Putnam Earnings), adjusted up or down for the percentage change in the median P/E of the Asset Manager Basket from the prior quarter-end to the current quarter-end, multiplied by current quarter-end Putnam Earnings (illustrative example in Exhibit E). The calculation of the March 31 Price and September 30 Price will be performed by Putnam and verified by a nationally recognized independent valuation firm chosen by the Committee with the approval of the MMC Committee. |
4. Putnam Earnings = the consolidated after-tax earnings per share on a fully diluted basis of Putnam over the twelve (12) months ending on the last business day of Putnam's fiscal quarter ending immediately prior to the Valuation Date, as reported in the Putnam consolidated financial statements, with such statements as of the end of any fiscal year to be as audited by Deloitte & Touche LLP or other such accounting firm used by MMC, and such statements as of the end of a period other than a fiscal year to be unaudited, all such statements to be prepared in accordance with United States generally accepted accounting principles on a consistent basis. For purposes of
B-1 |
this methodology, Putnam earnings will exclude (i) any discontinued operations and/or extraordinary items, as defined under United States generally accepted accounting principles, (ii)
overhead expenses (net of applicable tax effect) incurred by MMC (as described in Section 6.2 of the Intercompany Agreement by and between MMC and Putnam dated as of September 30, 1997) and (iii) any material nonrecurring items (excluding, however, any such items arising pursuant to the Plan, except for Sections 8(b)(ii) and 9 thereof) as determined by the Committee (with the approval of MMC), in each instance that are included in such consolidated financial statements. For purposes of clause (iii) of this Section 4, for any individual charge or credit to be eligible to be determined material by MMC, the net of the aggregate charges and credits under said clause (iii) must exceed 3% of Putnam's pretax earnings for such twelve (12) month period.
5. Asset Manager Basket = group of asset management companies (listed on Exhibit F) that have common stock or American Depositary Receipts (ADR) trading on a major United States stock exchange, and a large enough presence in the asset management industry to warrant inclusion in the Asset Manager Basket, as determined by the Committee. The Committee, with the approval of the MMC Committee, shall have the authority to add or delete asset management companies from the Asset Manager Basket to reflect privatizations, mergers, acquisitions, dispositions or new listings, or any other events that the Committee deems relevant.
6. Asset Manager Basket Median P/E = the median P/E of all the individual Asset Manager Basket Company P/Es. The P/E of an individual Asset Manager Basket Company equals that Asset Manager Basket Companys Price divided by that Asset Manager Basket Companys Earnings ("Basket Company Price" and "Basket Company Earnings" each as defined below) of each of the asset management companies in the Asset Manager Basket.
(a) Basket Company Price = the closing price per share of common stock or ADR of an asset management company included in the Asset Manager Basket as of the last business day of Putnam's fiscal quarter ending immediately prior to the Valuation Date
(b) Basket Company Earnings = the diluted earnings per share of an asset management company included in the Asset Manager Basket for the twelve (12) months ending on the last business day of Putnam's fiscal quarter ending immediately prior to the Valuation Date (or, if such information is not then available for such twelve-month period, over the most recent twelve-month period for which information is then available, as determined by the Committee with approval of MMC). The fully diluted earnings per share shall exclude the results of discontinued operations and extraordinary items as defined under United States generally accepted accounting principles with respect to companies based in the United States. With respect to companies based outside the United States (i) earnings shall exclude the results of discontinued operations and extraordinary items as defined under United States generally accepted accounting principles if such company provides a reconciliation of its financial statements to United States generally accepted accounting principles or (ii) if no such reconciliation is provided, then (x) discontinued operations and extraordinary items as reported in the non-United States financial statements shall be excluded, (y) any individual exceptional item in such non-United States financial statements representing less than 3% of pre-tax earnings shall be excluded and (Z) any individual exceptional item in such non-United States financial statements representing 3% or more of pre-tax earnings may be excluded if the Committee and the MMC Committee agree.
B-2
EXHIBIT C
Guidelines for Independent Valuation
The Fair Market Value shall equal the fully distributed trading value ("FDTV"), adjusted for the Discount. The FDTV of 100% of Putnam shall be determined on the basis of Putnam's then prevailing business, assets, financial condition and results of operations, based on the assumptions that (i) Putnam is a going concern with long-term stable management, (ii) Putnam's cost structure is generally consistent with that of a stand-alone business, (iii) the common stock of Putnam is fully distributed and traded in a public securities market without any premium for a change-in-control and (iv) all Options to purchase Class B Shares, which exercise price is less than or equal to the value of the Class B Shares to be obtained upon exercise thereof have been exercised and all amounts payable upon the exercise of such Options have been paid in full and in cash.
C-1
EXHIBIT D
FORM OF NOTICE OF EXERCISE
In accordance with the terms and conditions of the Putnam Investments Trust Equity Partnership Plan (the Plan) and the Restricted Stock and Option Award Agreement (the Agreement) between Putnam Investments Trust (Putnam) and the undersigned dated ___________, the undersigned hereby elects to exercise the Option granted under such Agreement in the manner indicated below.
Total shares purchased hereunder: |
__________ |
Exercise price per share: |
$_________ |
Total exercise price: |
$_________ |
Withholding taxes due: |
$_________ |
Total amount due: |
$_________ |
Payment is made by submitting:
1. |
Cash, in the amount of: |
$_________ |
2. |
Check, payable in the amount of: |
$_________ |
3. |
Class B Shares, owned by me for |
at least six months (following the
date of vesting or the date of exercise,
as the case may be), as follows:
(a) Number of shares |
__________ |
(b) Fair Market value per share |
$_________ |
(c) Total value of Class B Shares: |
$_________ |
4. |
Total Value Submitted: |
$_________ |
I understand and agree that the Class B Shares received pursuant to this exercise are subject to all the terms and conditions of the Plan, the Agreement and the Declaration of Trust of Putnam, and are subject to forfeiture also in the event of a violation of the Non-Solicitation Agreement by and between Putnam and me. I understand that I will not, by virtue of having exercised this Option, be receiving certificates representing the Class B Shares purchased hereunder, but that, as soon as practicable following receipt of this notice and the payment of the total exercise price hereunder, a book entry shall be made in the records of Putnam to evidence this exercise.
I acknowledge that I have received and reviewed a copy of the Confidential Memorandum dated March 15, 2005.
I represent and warrant to Putnam as follows (check one): |
__ |
I am an "accredited investor" under the net worth test set forth in paragraph (a)(5) of Rule 501 of Regulation D of the Securities Act of 1933, as amended (the "Securities Act"), in that I have an in |
D-1
dividual net worth, or joint net worth with my spouse, at the time of the grant of the Option and the exercise of the Option which exceeds $1,000,000.
__ |
I am an "accredited investor" under the net income test set forth in paragraph (a)(6) of Rule 501 of Regulation D under the Securities Act in that I had an individual income in excess of $200,000 in each of the two most recent years or joint income with my spouse in excess of $300,000 in each of those years and have a reasonable expectation of reaching the same income level in the current year. |
__ |
I am not an accredited investor, as described above. |
Signature: __________________________ |
Date: _________________________ |
Print Name: _________________________ |
Social Security #: _______________ |
D-2
EXHIBIT E
Example of Calculated FDTV
Prior Quarter-end
Independent Value FDTV: |
$60.00* | ||
Putnam Earnings: |
$3.50 |
| |
Putnam P/E: |
17.14 |
| |
Asset Manager Basket Median P/E: |
18.00 |
| |
*Independent Value FMV (70% of FDTV): |
$42.00 |
Current Quarter-end
Asset Manager Basket Median P/E: |
19.00 |
| ||||
Change in Asset Manager Basket Median P/E: |
5.56% |
| ||||
Putnam Earnings: |
$3.60 |
| ||||
Putnam P/E: |
18.10 (17.14 x (1+0.0556)) | |||||
Calculated Value FDTV: |
$65.14** |
| ||||
**Calculated Value FMV (70% of FDTV): $45.60
E-1
EXHIBIT F
Asset Manager Basket Companies |
1. |
Affiliated Managers Group, Inc. |
| ||||||||||||
2. |
Alliance Capital Management Holding L.P. |
| ||||||||||||
3. |
AMVESCAP PLC |
| ||||||||||||
4. |
BlackRock, Inc. |
| ||||||||||||
5. |
Eaton Vance Corp. |
| ||||||||||||
6. |
Federated Investors, Inc. |
| ||||||||||||
7. |
Franklin Resources, Inc. |
| ||||||||||||
8. |
Gabelli Asset Management Inc. |
| ||||||||||||
9. |
Janus Capital Group, Inc. (f/k/a Stilwell Financial, Inc.) | |||||||||||||
10. |
The John Nuveen Company |
| ||||||||||||
11. |
Legg Mason, Inc. |
| ||||||||||||
12. |
T. Rowe Price Group, Inc. |
| ||||||||||||
13. |
Waddell & Reed Financial, Inc. |
| ||||||||||||
14. |
W.P. Stewart & Co., Ltd. |
| ||||||||||||
F-1
Exhibit 10.29
EMPLOYMENT AGREEMENT
This Employment Agreement (the Agreement) is made and entered into January 1, 2006 (the Effective Date), by and between Putnam Investments LLC (together with its successors and assigns, Putnam or the Company), a Delaware limited liability company, and Charles E. Haldeman (the Executive).
WHEREAS, the Executive and the Company desire to embody in this Agreement the terms and conditions of the Executives continued employment by the Company;
NOW, THEREFORE, in consideration of the premises and mutual promises contained in this Agreement, including the compensation to be paid to the Executive, the parties hereby agree:
ARTICLE 1
Employment, Duties and Responsibilities
1.1 Employment; Reporting. The Company shall continue to employ the Executive as its President and Chief Executive Officer. The Executive hereby accepts such continued employment, subject to the terms and conditions of this Agreement. The Executive shall report directly to the Chief Executive Officer (the MMC CEO) of Marsh & McLennan Companies, Inc. (MMC).
1.2 Duties and Responsibilities.
(a) The Executive shall have such duties and responsibilities and power and authority as those normally associated with the position of President and Chief Executive Officer of the Company, as well as any additional duties, responsibilities and/or powers and authority assigned to him by the MMC CEO which are consistent with his position as President and Chief Executive Officer of the Company.
(b) The Executive agrees to continue to use his best efforts to promote the interests of the Company and MMC, and agrees that he will devote his entire working time, care and attention to his duties, responsibilities and obligations to the Company and MMC throughout the Term (as defined in Section 2.1 hereof). The Executive may serve on the boards of other civic, charitable and corporate entities with the prior written consent of the MMC CEO so long as such activity does not interfere with the Executives duties and responsibilities as President and Chief Executive Officer of the Company. Notwithstanding the foregoing, the Executive may continue to serve on the boards of Dartmouth College and the Investment Company Institute and on the Partners Healthcare Investment Committee.
ARTICLE 2
Term
2.1 Employment Period. The term of the Executives employment under this Agreement (except as may be shortened in accordance with Article 5 hereof, the Term) shall commence on the Effective Date and shall continue through December 31, 2009.
ARTICLE 3
Compensation
As compensation and consideration for the performance by the Executive of his obligations under this Agreement, during the Term the Executive shall be entitled to the compensation and benefits set forth in this Article 3 (collectively, Compensation) (subject, in each case, to the provisions of Article 5 hereof).
3.1 Base Salary. The Executive shall receive an annual base salary (Base Salary) of $900,000. The Base Salary shall be reviewed at least annually by the Compensation Committee (the Committee) of the Board of Directors of MMC (the Board) and may be increased (but not decreased) in the sole discretion of the Committee. If the Executives Base Salary is increased, the increased amount shall thereafter be the Base Salary. The Base Salary shall be payable in installments, consistent with the Companys payroll procedures in effect from time to time.
3.2 Annual Bonus. In addition to Base Salary, the Executive shall be eligible to participate throughout the Term in an annual bonus program (Annual Bonus Program), under which the Executives annual bonus will be calculated using the methodology set forth in Exhibit B. The calculations will begin with a starting annual target bonus of $5,000,000. The annual bonus shall be paid at the same time and in the same manner as annual bonuses of similarly situated executives of either MMC or the Company, as determined by the Committee.
3.3 Long-Term and Equity Compensation.
(a) The Executive shall also be eligible to participate throughout the Term in the Putnam Investments Trust Equity Partnership Plan, or any successor long-term incentive compensation plans applicable to the Companys senior executive officers (the Putnam Equity Partnership Plan). The Executives annual long term award will be calculated using the methodology set forth in Exhibit B. The calculations will begin with a starting grant-date target value of $5,000,000. The terms and conditions of awards made pursuant to this Section 3.3 shall be determined by the Committee and contained in grant documents; provided, that, subject to Section 5.6(b) hereof, the terms and conditions shall be consistent with those applicable to corresponding awards to other senior executives of the Company generally.
|
- 2 - |
|
(b) Immediately following the end of the Term, the Executive will qualify for retirement status under the Companys retirement plan. Accordingly, the Company agrees that the Executive's termination of employment after the end of the Term will be treated as a "Retirement" termination for purposes of Putnam's Equity Partnership Plan, subject to the terms and conditions of the Putnam Equity Partnership Plan. The Executive understands that as a condition for treatment of his termination as a "retirement" for purposes of the Putnam Equity Partnership Plan, the Executive may not engage in any behavior that would constitute Competitive Activity (as defined in Section 4.1(a) hereof) for two (2) years following the Executives termination of employment. In the event the Executive, directly or indirectly, engages in any behavior that would constitute Competitive Activity during the two (2) year period following the Executives termination of employment, Putnam shall be allowed to treat the termination of employment for all purposes under the Putnam Equity Partnership Plan as if it had been an involuntary termination of employment not "for Cause" as of the date that such Competitive Activity commences, subject to the following special provisions:
(i) Any investment the Executive may make in a business in competition with the business of Putnam shall not be considered to give rise to a violation of this covenant if the following three conditions are met: (1) the stock of such business is publicly traded, (2) the Executives equity interest in such business does not exceed five percent (5%) of the aggregate outstanding equity interests of such business and (3) the Executive does not otherwise participate in the management or operational affairs of such business.
(ii) These covenants shall not be considered violated by the Executives management of funds (whether personally or as an employee or partner of a business formed for this purpose) solely on behalf of himself or himself and one or more of his family members or other relatives.
3.4 Initial Retention Award. Within two (2) weeks of the Effective Date, the Executive shall be granted an initial retention award under the Putnam Equity Partnership Plan (the Initial Retention Award) comprised of (i) restricted stock with a grant-date value equal to $9,000,000 and (ii) stock options with a grant-date value equal to $3,000,000 (the value of such options shall be determined using the Black Scholes valuation method). The terms and conditions of awards made pursuant to this Section 3.4 shall be determined by the Committee and contained in grant documents; provided, that, subject to Section 5.6(b) hereof, the terms and conditions shall be consistent with those applicable to corresponding awards made to other senior executives of the Company in September 2005 pursuant to the Companys special equity grant program.
3.5 Benefit Plans. Throughout the Term, the Executive and the Executives spouse and eligible dependents, as the case may be, shall be eligible to participate in employee benefit and fringe benefit plans and programs provided by the Company, including but not limited to retirement, life insurance, health, dental and disability plans and programs, on terms and conditions generally applicable to executives of the Company. Nothing herein shall limit the Companys or MMCs ability to change, modify, cancel or amend any such plans.
|
- 3 - |
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3.6 Perquisites. Throughout the Term, the Executive shall be eligible for all approved Putnam perquisites currently made available to him or to other senior executives of the Company, which may be changed by the Company at any time.
3.7 Expenses. The Company will reimburse the Executive for reasonable business-related expenses incurred by him in connection with the performance of his duties hereunder during the Term, subject, however, to its written policies relating to business-related expenses as in effect, from time to time, during the Term, a copy of which has been made available to the Executive.
3.8 Vacation. The Executive shall be entitled to paid vacation in accordance with the Companys policy in effect from time to time during the Term.
3.9 Indemnification. The Executive shall be entitled to indemnification in accordance with the Companys by-laws as in effect from time to time.
ARTICLE 4
Noncompetition/Nonsolicitation/Confidentiality
4.1 Noncompetition and Nonsolicitation Periods
(a) During the Executives employment with the Company and during the applicable noncompetition/nonsolicitation period following termination of the Executives employment with the Company for any reason (other than a termination of employment by the Company due to Disability (as defined in Section 5.4 hereof)), the Executive shall not, directly or indirectly:
(i) |
engage in any Competitive Activity or |
(ii) |
whether on behalf of himself or any other person or entity (x) solicit any customer or client of the Company or any affiliate with respect to a Competitive Activity or (y) solicit or employ any employee of the Company or any affiliate for the purpose of causing such employee to terminate his or her employment with the Company or such affiliate. |
For purposes of this Agreement, Competitive Activity shall mean the Executives engaging in an activity whether as an employee, consultant, principal, member, agent, officer, director, partner or shareholder (except as a less than 1% shareholder of a publicly traded company) that is competitive with any business of the Company or any affiliate conducted by the Company or such affiliate as of the date of the termination of the Executives employment; provided, however, that the Executive may be employed by or otherwise associated with:
(i) |
a business of which a subsidiary, division, segment, unit, etc. is in competition with the Company or any affiliate but as to which such |
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subsidiary, division, segment, unit, etc., the Executive has absolutely no direct or indirect responsibilities or involvement, or
(ii) |
a company where the Competitive Activity is: |
(x) |
from the perspective of such company, de minimis with respect to the business of such company and its affiliates, and |
(y) |
from the perspective of the Company or any affiliate, not in material competition with the Company or any affiliate. |
Except in the case of termination of employment after the Term without renewal of this Agreement, the noncompetition/nonsolicitation period shall be twenty-four (24) months from the date of termination of employment. In the event that the Executives employment with the Company terminates after the Term, and provided that the Executive has worked for the Company through the end of the Term, the Company may elect to enforce the foregoing noncompetition/nonsolicitation covenant for up to twelve (12) months, provided the Company pays the Executive $10,000,000 in cash in installments over the 12 month period (or a pro-rata amount for such shorter period), during which the Executive is bound by such covenant. The installments shall be paid consistent with the Companys payroll procedures in effect from time to time.
(b) At all times prior to and following the Executives termination of employment, the Executive shall not disclose to anyone or make use of any trade secret or proprietary or confidential information of the Company or any affiliate, including such trade secret or proprietary or confidential information of any customer or client or other entity to which the Company or any affiliate owes an obligation not to disclose such information, which the Executive acquires during the Executives employment with the Company or any affiliate, including but not limited to records kept in the ordinary course of business except:
(i) |
As such disclosure or use may be required or appropriate in connection with the Executives work as an employee of the Company or any affiliate; |
(ii) |
When required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or any affiliate or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order the Executive to divulge, disclose or make accessible such information; |
(iii) |
As to such confidential information that becomes generally known to the public or trade without the Executives violation of this Section 4.1(b); or |
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(iv) |
To the Executives spouse and/or the Executive personal tax and financial advisors as reasonably necessary or appropriate to advance the Executives tax, financial and other personal planning (each an Exempt Person), provided, however, that any disclosure or use of any trade secret or proprietary or confidential information of the Company or any affiliate by an Exempt Person shall be deemed to be a breach of this Section 4.1(b) by the Executive. |
(c) The Executive acknowledges and agrees that the covenants contained in Sections 4.1(a) and (b) hereof are reasonable and necessary to protect the confidential information and goodwill of the Company and its affiliates. The Executive further represents that his experience and capabilities are such that the provisions of Sections 4.1(a) and (b) hereof will not prevent him from earning a livelihood.
ARTICLE 5
Termination; Change of Control
5.1 Termination by the Company or by MMC. The Company or MMC shall have the right, subject to the terms of this Agreement, to terminate the Executives employment at any time, with or without Cause. The Company or MMC shall give the Executive written notice of a termination for Cause (the Cause Notice) in accordance with Section 6.2 hereof. The Cause Notice shall state the particular action(s) or inaction(s) giving rise to the termination for Cause. No action(s) or inaction(s) will constitute Cause unless (1) a resolution finding that Cause exists has been approved by a majority of all of the members of the Board at a meeting at which the Executive is allowed to appear with his legal counsel and (2) where remedial action is feasible, the Executive fails to remedy the action(s) or inaction(s) within ten (10) days after receiving the Cause Notice. If the Executive so effects a cure to the satisfaction of the Board, the Cause Notice shall be deemed rescinded and of no force or effect. For purposes of this Agreement, Cause shall mean only:
(a) any willful refusal by the Executive to follow lawful directives of the Board which are consistent with the scope and nature of the Executives duties and responsibilities as set forth herein;
(b) the Executives conviction of, or plea of guilty or nolo contendere to, a felony or of any crime involving moral turpitude, fraud or embezzlement;
(c) any gross negligence or willful misconduct of the Executive resulting in a material loss to the Company or MMC or any of its affiliates, or material damage to the reputation of the Company or MMC or any of its affiliates;
(d) any material breach by the Executive of any one or more of the covenants referred to in Article 4 hereof; or
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(e) any violation of any statutory or common law duty of loyalty to the Company or any of its affiliates.
5.2 Termination by the Executive. The Executive shall have the right, subject to the terms of this Agreement, to terminate his employment at any time with or without Good Reason provided, that the Executive must give the Company and MMC at least 30 days prior written notice of any termination by the Executive without Good Reason in accordance with Section 6.2 hereof. For purposes of this Agreement, Good Reason, shall mean the occurrence of any of the following during the Term, without the Executives prior written consent, during the 60-day period preceding a termination by the Executive (provided that an isolated, insubstantial or inadvertent action not taken in bad faith or a failure not occurring in bad faith which is remedied by the Company or MMC promptly after receipt of notice thereof given by the Executive shall not constitute Good Reason): (A) the assignment to the Executive of any duties materially inconsistent in any respect with the Executives position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by this Agreement; (B) any removal of the Executive from any of the positions he holds as of the date of this Agreement; (C) any failure by the Company or MMC to comply with the provisions of Article 3 hereof; (D) a failure by the Company to comply with any other material provision of this Employment Agreement; or (E) a change in the Executives principal work location to more than 50 miles from the Companys current headquarters.
5.3 Death. In the event the Executive dies during the Term, the Executives employment shall automatically terminate, such termination to be effective on the date of the Executives death.
5.4 Disability. In the event that the Executive shall suffer a disability during the Term which shall have prevented him from performing satisfactorily his obligations hereunder for a period of at least ninety (90) consecutive days or one hundred eighty (180) non-consecutive days within any three hundred sixty-five (365) day period (Disability), the Company shall have the right to terminate the Executives employment, such termination to be effective upon the giving of notice thereof to the Executive in accordance with Section 6.2 hereof.
5.5 Effect of Termination.
(a) In the event of termination of the Executives employment for any reason during the Term, the Term shall end as of the date of termination and the Company shall pay to the Executive (or his beneficiary, heirs or estate in the event of his death), as provided in Section 5.7 hereof, (i) any Base Salary to the extent not theretofore paid, (ii) any reimbursable business expenses that have not yet been reimbursed, and (iii) if not yet paid, the earned annual bonus for the calendar year that preceded the time of the termination (collectively, the Accrued Obligations).
(b) In the event of termination of the Executives employment during the Term (i) by the Company or MMC for Cause or (ii) by the Executive for other than for Good
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Reason, neither the Executive nor any beneficiary, heir or estate of the Executive shall be entitled to any further compensation other than the Accrued Obligations. In such event, all of the Executives outstanding unvested equity-based awards shall be immediately forfeited.
(c) In the event of termination of the Executives employment during the Term (i) by the Company based on the Disability of the Executive as defined in Section 5.4 hereof, or (ii) due to the Executives death, the Company shall pay the Executive (or his estate, beneficiary or heir in the case of death), in addition to the Accrued Obligations, a prorated target annual bonus for the year in which the termination occurs based on the portion of the year elapsed as of the date of such termination. Any such bonus amount shall be paid as provided in Section 5.7 hereof. In addition, upon such a termination, all unvested equity awards held by the Executive as of the date of termination that were granted to the Executive pursuant to Sections 3.3 and 3.4 hereof shall immediately fully vest as of the date of termination.
(d) In the event of termination of the Executives employment during the Term (i) by the Company or MMC other than for Cause (and not due to the Executives death or Disability), or (ii) by the Executive for Good Reason, in either case which is not covered by Section 5.6 hereof, the Company shall pay the Executive, in addition to the Accrued Obligations, a lump sum amount equal to 200% times the sum of (x) the Executives then-current Base Salary, (y) the average annual bonus actually paid to the Executive (including bonus amounts paid in restricted stock, if any, which is not to be included in (z) below), during the three (3) years prior to the termination (or such shorter time if the termination occurs prior to the payment of three (3) annual bonuses to the Executive, and (z) the average long-term compensation award actually made to the Executive pursuant to Section 3.3 hereof (but excluding awards made pursuant to Section 3.4 hereof and any other special long-term compensation awards) during the three (3) years prior to the termination (or such shorter time if the termination occurs prior to the granting of three (3) long-term incentive awards to the Executive under this Agreement, (such sum is the Annual Compensation). The Executive shall also be entitled to a prorated annual bonus for the year in which the termination occurs based on the degree of achievement of goals under the bonus program in effect at the time of termination and the portion of the year elapsed as of the date of such termination. The degree of achievement of goals shall be determined in accordance with Exhibit B herein ), or if termination occurs before the 2006 bonus has been actually paid to the Executive, then the 2006 starting target bonus shall be included for purposes of determining the average annual and prorated annual bonus. Any such bonus amount shall be paid at the same time as annual bonuses for the year are paid to the Companys senior executives generally. In addition, upon such a termination, all unvested equity awards held by the Executive as of the date of termination that were granted to the Executive pursuant to Sections 3.3 and 3.4 hereof shall immediately fully vest as of the date of termination.
5.6 Change in Control.
(a) Upon the termination of the Executives employment by the Company without Cause or by the Executive for Good Reason during (i) the 6-month period immediately preceding or (ii) the 2-year period immediately following either a Change in Control of Putnam
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or a Change in Control of MMC (each as defined in the Putnam Equity Partnership Plan, as in effect on the date hereof) the Executive shall be entitled to receive, in addition to the Accrued Obligations, the amounts determined in Section 5.5(d) hereof. Payments due to the Executive under this Section 5.6 are not intended to duplicate amounts payable under Section 5.5(d) but rather shall be offset, dollar-for-dollar, by corresponding amounts (if any) previously paid under Section 5.5(d) (e.g., if the termination occurred prior to the applicable Change in Control).
(b) If, as a result of a Change in Control of MMC as defined in the MMC 2000 Senior Executive Incentive and Stock Award Plan, an amount attributable to any equity award to the Executive under the Putnam Equity Partnership Plan (the "Payments") is determined to be subject to the excise tax imposed by section 4999 of the Internal Revenue Code of 1986, as amended or any similar tax that may hereafter be imposed (the "Excise Tax"), the Company shall pay the Executive an additional amount (the "Special Reimbursement") such that this amount, after deduction of any federal, state and local income and employment tax and Excise Tax on the Special Reimbursement, shall be equal to the Excise Tax on the Payments. It is intended that determinations regarding the timing and amount of the Special Reimbursement, including without limitation whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, will be made in a manner that is consistent with the provisions of Section 9(d) of the MMC 2000 Senior Executive Incentive and Stock Award Plan.
5.7 Conditions. Any payments or benefits made or provided pursuant to this Article 5 (other than the Accrued Obligations) are subject to the Executives:
(a) compliance with the provisions of Article 4 and Section 5.9 hereof (provided that this shall not affect the timing of the payment to the Executive provided for below in this Section 5.7 unless the Executive is in material breach of any of such provisions as of the time such payment is to be made);
(b) delivery to the Company of an executed General Release, which shall be substantially in the form attached hereto as Exhibit A, with such changes therein or additions thereto as needed under then applicable law to give effect to its intent and purpose; and
(c) delivery to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and employee benefit plans.
Notwithstanding the due date of any post-employment payments, any amounts due following a termination under this Agreement (other than the Accrued Obligations, which shall be paid when due or on such later date as may be required to avoid any additional tax under Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A)) shall not be due until after the expiration of any revocation period applicable to the General Release without the Executive having revoked such General Release, and any such amounts shall be paid to the Executive within thirty (30) days of the expiration of such revocation period without the occurrence of a revocation by the Executive (or, if later, the earliest date as may be required to avoid any additional tax under Section 409A). Nevertheless (and regardless of whether the
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General Release has been executed by the Executive), upon any termination of Executives employment, Executive shall be entitled to receive the Accrued Obligations, payable within thirty (30) days after the date of termination or in accordance with the applicable plan, program or policy.
5.8 No Mitigation. The Executive shall be under no obligation to seek other employment following a termination of his employment with the Company and any affiliate for any reason. In addition, there shall be no offset against amounts due to the Executive under this Article 5 on account of any compensation attributable to any subsequent employment.
5.9 Cooperation; Assistance. The Executive agrees to cooperate fully, subject to reimbursement by the Company of reasonable out-of-pocket costs and expenses, with the Company or any affiliate and their counsel with respect to any matter (including any litigation, investigation or governmental proceeding) which relates to matters with which the Executive was involved or about which he had knowledge during his employment with the Company or any affiliate. Such cooperation shall include appearing from time to time at the offices of the Company or MMC or their counsel for conferences and interviews and in general providing the officers of the Company or MMC and their counsel with the full benefit of the Executives knowledge with respect to any such matter. The Executive further agrees, upon termination of his employment for any reason, to assist, for a reasonable period of time, his successor in the transition of his duties and responsibilities to such successor. The Executive agrees to render such cooperation in a timely fashion and at such times as may be mutually agreeable to the parties.
ARTICLE 6
Miscellaneous
6.1 Benefit of Agreement, Assignment; Beneficiary
(a) This Agreement shall inure to the benefit of and be binding upon the Company and its successors, assigns and any corporation or person which may acquire all or substantially all of the assets or business of the Company or with or into which the Company may be consolidated or merged. This Agreement shall also inure to the benefit of, and be enforceable by, the Executive and his personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to the Executive hereunder if he had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to the Executives beneficiary, devisee, legatee or other designee, or if there is no such designee, to the Executives estate.
(b) The Company shall require any successor (whether direct or indirect, by operation of law, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company or MMC to expressly assume and agree to perform
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this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.
6.2 Notices. Any notice required or permitted hereunder shall be in writing and shall be sufficiently given if personally delivered or if sent by certified mail, postage prepaid, with return receipt requested or by reputable overnight courier, addressed: (a) in the case of the Company to the General Counsel of the Company at the Companys then-current headquarters, with a copy to the General Counsel of MMC at MMCs then-current headquarters, (b) in the case of MMC, to the General Counsel of MMC at MMCs then-current headquarters and (c) in the case of the Executive, to the Executives last known address as reflected in the Companys records, or to such other address as either party shall designate by written notice to the other party. Any notice given hereunder shall be deemed to have been given at the time of receipt thereof by the person to whom such notice is given if personally delivered or at the time of mailing if sent by certified mail or by courier.
6.3 Entire Agreement; Amendment. Except as specifically provided herein, this Agreement contains the entire agreement of the parties hereto and MMC with respect to the terms and conditions of the Executives employment during the Term and supersedes any and all prior agreements and understandings, whether written or oral, between the parties hereto with respect to compensation due for services rendered hereunder. For the avoidance of doubt, in the event of any inconsistency between this Agreement and any plan of the Company or MMC, the terms of this Agreement shall control. This Agreement may not be changed or modified except by an instrument in writing signed by both of the parties hereto.
6.4 Waiver. The waiver of either party of a breach of any provision of this Agreement shall not operate or be construed as a continuing waiver or as a consent to or waiver of any subsequent breach hereof.
6.5 Headings. The Article and Section headings herein are for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
6.6 Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of New York without reference to the principles of conflict of laws.
6.7 Agreement to Take Actions. Each party hereto shall execute and deliver such documents, certificates, agreements and other instruments and shall take such other actions, as may be reasonably necessary or desirable in order to perform his or its obligations under this Agreement or to effectuate the purposes hereof.
6.8 Dispute Resolution. Any dispute or controversy arising from or relating to this Agreement and/or the Executives employment or relationship with the Company or any affiliate shall be resolved by binding arbitration, to be held in New York City or in any other location mutually agreed to by the Company and the Executive in accordance with the rules and
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procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The Executive and the Company agree that, in the event a dispute arises that concerns this Agreement, if the Executive isthe Prevailing Party, the Executive shall be entitled to recover all of his reasonable fees and expenses, including, without limitation, reasonable attorneys fees and expenses, incurred in connection with the dispute. A Prevailing Party is one who is successful on any significant substantive issue in the action and achieves either a judgment in such partys favor or some other affirmative recovery.
6.9 Legal Fees. The Company agrees to pay directly or reimburse the Executive for reasonable legal fees and expenses incurred by the Executive in connection with the review, preparation and negotiation of this Agreement up to a maximum of $37,500; provided that the Executive provides the Company with appropriate written documentation with respect to such legal fees.
6.10 Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to effectuate the intended preservation of such rights and obligations, including without limitation Article 4 hereof.
6.11 Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision or provisions of this Agreement, which shall remain in full force and effect. If any provision of this Agreement is held to be invalid, void or unenforceable, any court so holding shall substitute a valid, enforceable provision that preserves, to the maximum lawful extent, the terms and intent of this Agreement.
6.12 Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word including shall mean including without limitation.
6.13 Section 409A. It is intended that this Agreement and the Companys and the Executives exercise of authority or discretion hereunder shall comply with the provisions of Section 409A and the treasury regulations relating thereto so as not to subject the Executive to the payment of interest and tax penalty which may be imposed under Section 409A. In furtherance of this interest, to the extent that any regulations or other guidance issued under Section 409A would result in the Executive being subject to payment of additional tax under Section 409A, the parties agree to use their best efforts to amend this Agreement in order to avoid the imposition of any such additional tax under Section 409A, which such amendment shall be designed to minimize the adverse economic effect on the Executive without increasing the cost to the Company (other than transactions costs), all as reasonably determined in good faith by the
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Company and the Executive to maintain to the maximum extent practicable the original intent of the applicable provisions.
6.14 Withholding. All compensation paid or provided to the Executive under this Agreement shall be subject to any applicable income, payroll or other tax withholding requirements.
6.15 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this amendment and restatement of the Agreement on this 27th day of February, 2006, effective as of the date first written above.
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PUTNAM INVESTMENTS LLC
By: /s/ Amrit Kanwal
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EXHIBIT A
GENERAL RELEASE OF ALL CLAIMS
1. For valuable consideration, the adequacy of which is hereby acknowledged, the undersigned (the Executive), on his own behalf and on behalf of his heirs, executors, administrators, successors, representatives and assigns, does herein knowingly and voluntarily unconditionally release, waive, and fully discharge Putnam and Marsh & McLennan Companies (MMC), Inc., together with all of their respective current and former officers, directors, agents, representatives and employees, and each of their predecessors, successors and assigns (collectively, the Releasees), from any and all debts, demands, actions, causes of action, accounts, covenants, contracts, agreements, claims, damages, omissions, promises, and any and all claims and liabilities whatsoever, of every name and nature, known or unknown, suspected or unsuspected, both in law and equity (Claims), which the Executive has ever had, now has, or may hereafter claim to have against the Releasees by reason of any matter, cause or thing whatsoever arising from the beginning of time to the time Executive signs this agreement (the General Release). This General Release of Claims shall apply to any Claim of any type, including, without limitation, any and all Claims of any type that the Executive may have arising under the common law, under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Americans With Disabilities Act of 1967, the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, or Mass. Gen. Laws ch. 151B, each as amended, and any other federal, state or local statutes, regulations, ordinances or common law creating employment-related causes of action, or under any policy, agreement, understanding or promise, written or oral, formal or informal, between any of the Releasees and the Executive, and shall further apply, without limitation, to any and all Claims in connection with, related to or arising out of the Executives employment, or the termination thereof, with Putnam, and all Claims for alleged tortious, defamatory or fraudulent conduct; provided, however, that nothing contained in this General Release shall impair any vested rights or benefits the Executive may have under Putnam's or MMCs various benefit plans or under that certain Employment Agreement dated as of the 27th day of February 2006 by and between the Company and Executive (as may have been amended from time to time, the Employment Agreement), or waive post-termination health-continuation insurance benefits required by state or Federal law. Except as provided in the Employment Agreement, the Executive also hereby waives any Claim for reinstatement, severance pay, attorneys fees, or costs. By signing this General Release, the Executive agrees and represents that he will not be entitled to any personal recovery in any action or proceeding that may be commenced on his behalf arising out of any of the matters that are the subject of the General Release; provided, however, that nothing in this General Release shall prevent the Executive from seeking to enforce his rights under this General Release, and provided further that Putnam agrees that it will hold the Executive harmless and indemnify the Executive against any claims against him arising out of his employment to the extent provided for in Putnams organizing documents or existing and applicable insurance policies.
2. This General Release, and the rights and obligations of the Executive and Putnam hereunder, shall inure to the benefit of and shall be binding upon, the Executive, his heirs and representatives, and upon Putnam, its successors and assigns. This General Release may not be assigned by the Executive.
3. In further consideration of the promises made by the Company in this General Release, the Executive specifically waives and releases the Company from all claims Executive may have as of the date of this General Release, whether known or unknown, arising under the ADEA. The Executive further agrees that:
(a) |
The Executives waiver of rights under this General Release is knowing and voluntary and in compliance with the Older Workers Benefit Protection Act of 1990 (OWBPA); |
(b) |
Executive understands the terms of this General Release; |
(c) |
The consideration offered by the Company under Article 5 of the Employment Agreement in exchange for the General Release represents consideration over and above that to which the Executive would otherwise be entitled, and that the consideration would not have been provided had the Executive not agreed to sign the General Release and did not sign the Release; |
(d) |
Company is hereby advising the Executive in writing to consult with an attorney prior to executing this General Release; |
(e) |
The Company is giving the Executive a period of twenty-one (21) days within which to consider this General Release; |
(f) |
Following the Executives execution of this General Release, Executive has seven (7) days in which to revoke this General Release by written notice. An attempted revocation not actually received by the Company prior to the revocation deadline will not be effective; and |
(g) |
This General Release and all payments and benefits otherwise payable under Article 5 of the Employment Agreement (other than the Accrued Obligations) shall be void and of no force and effect if the Executive chooses to so revoke, and if Executive chooses not to so revoke, this General Release shall then become effective and enforceable. |
4. This General Release does not waive rights or claims that may arise under the ADEA after the date the Executive signs this General Release. To the extent barred by the OWBPA, the covenant not to sue contained in Section 2, above, does not apply to claims under the ADEA that challenge the validity of this General Release.
5. To revoke this General Release, Executive must send a written statement of revocation to:
[Putnam] |
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[Address] |
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[City, State Zip Code] |
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Attn: ______________________ | |||
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The revocation must be received no later than 5:00 p.m. on the seventh day following Executives execution of this General Release. If the Executive does not revoke, the eighth day following the Executives acceptance will be the effective date of this General Release.
6. This General Release shall be governed by the internal laws (and not the choice of laws) of the State of New York, except for the application of pre-emptive Federal law.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
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EXHIBIT B
The Executives annual bonus (under Section 3.2) and annual long term grant (under Section 3.3) shall be calculated and paid pursuant to the terms of MMCs Senior Management Incentive Compensation Plan, a shareholder-approved bonus plan, in order to qualify such compensation as qualified performance-based compensation within the meaning of Internal Revenue Code Section 162(m). Subject to the foregoing, this Exhibit sets forth the methodology to be used during the Term to determine the Executives annual bonus (under Section 3.2) and annual long term grant (under Section 3.3).
1) |
The annual target under each of Section 3.2 and Section 3.3 shall start at $5 million. |
2) |
Each target shall be adjusted (positively or negatively) by 150% of the percentage change in assets under management AUM, from December 31, 2005. This calculation will be based on assets under management consistent with how management fees are charged to retail and institutional clients. Any assets acquired through acquisitions will be added to the 12/31/05 AUM at the date of the acquisition. | ||
3) |
Each target shall be further adjusted, if certain investment performance goals (measured over the immediately preceding three calendar years) are met. If the goals are met, the target will be increased using the applicable threshold only as follows: | ||
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if the investment returns of 60% or more of retail assets are below the median investment return, no further adjustment will be made to the target1 | |
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if 60% or more of retail assets are at or above median, but at or below the 65th percentile, the target is increased by 20% | |
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if 60% or more of retail assets are above the 65th percentile, but at or below the 75th percentile, the target is increased by 35% | |
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if 60% or more of retail assets are above the 75th percentile, the target is increased by 50% | |
4) |
Following the application of the two prior adjustments to each target, if applicable, the actual annual bonus payment and long-term award imposed by section 4999 of the Internal Revenue |
_________________________
1The percentage of assets above median (or other percentiles) will be calculated based only on open-end retail asset performance (a proxy for total Putnam performance). Total net return performance of A shares will be used and weighted by full fund assets relative to their Trustee endorsed Lipper category. The investment performance will be calculated by Putnams Performance Anlaytics department in compliance with all industry accepted standards and consistent with agreement with Putnam Trustees.
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Code of 1986, as amended for the year may each be separately adjusted plus or minus 10%, based on the Executives performance with respect to personal goals and objectives. |
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In other words, the actual annual bonus payment and long-term award will range between 90% and 110% of the revised target. | |
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5 |
|
Marsh & McLennan Companies, Inc. and Subsidiaries |
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| ||||||||||||
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
2001 |
|
Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and minority interest |
|
$ |
571 |
|
$ |
402 |
|
$ |
2,287 |
|
$ |
2,095 |
|
$ |
1,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
332 |
|
|
219 |
|
|
185 |
|
|
160 |
|
|
196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of rents representative of the interest factor |
|
|
157 |
|
|
162 |
|
|
150 |
|
|
128 |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,060 |
|
$ |
783 |
|
$ |
2,622 |
|
$ |
2,383 |
|
$ |
1,881 |
|
Fixed Charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
332 |
|
$ |
219 |
|
$ |
185 |
|
$ |
160 |
|
$ |
196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of rents representative of the interest factor |
|
|
157 |
|
|
162 |
|
|
150 |
|
|
128 |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
489 |
|
$ |
381 |
|
$ |
335 |
|
$ |
288 |
|
$ |
315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of Earnings to Fixed Charges |
|
|
2.2 |
|
|
2.1 |
|
|
7.8 |
|
|
8.3 |
|
|
6.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
Name
|
|
Domicile
|
||
---|---|---|---|---|---|---|
1 |
1302318 Ontario Inc. |
Canada |
||||
2 |
600
North Pearl Inc. |
Texas |
||||
3 |
964886 Ontario, Inc. |
Canada |
||||
4 |
A.
Constantinidi & CIA. S.C. |
Uruguay |
||||
5 |
ACTU
Insurance Broking Pty Limited |
Australia |
||||
6 |
Administradora de Inmuebles Fin, S.A. de C.V. |
Mexico |
||||
7 |
Admiral Holdings Limited |
England and Wales |
||||
8 |
Admiral Underwriting Agencies Limited |
England and Wales |
||||
9 |
AFCO
Premium Acceptance Inc. |
California |
||||
10 |
AFCO
Premium Credit LLC |
Delaware |
||||
11 |
Affinity Financial Incorporated |
Iowa |
||||
12 |
Aldgate Investments Limited |
Bermuda |
||||
13 |
Aldgate US Investments |
England and Wales |
||||
14 |
Aldgate US Investments |
England and Wales |
||||
15 |
Alfram Consultores S.A.C. |
Peru |
||||
16 |
All
Asia Sedgwick Insurance Brokers Corporation |
Philippines |
||||
17 |
Allied Medical Assurance Services Limited (In liquidation) |
England and Wales |
||||
18 |
American Overseas Management Corporation (Canada) |
Canada |
||||
19 |
APRIMAN, Inc. |
California |
||||
20 |
Australian World Underwriters Pty Ltd. |
Australia |
||||
21 |
B.K.
Thomas & Partners Limited (In Liquidation) |
England and Wales |
||||
22 |
Bain
Clarkson Reinsurance Pty Ltd. |
Australia |
||||
23 |
Balis & Co., Inc. |
Pennsylvania |
||||
24 |
Bargheon US LLC |
Delaware |
||||
25 |
Beatlance Limited |
England and Wales |
||||
26 |
Benefit Planners Pty Ltd. |
Australia |
||||
27 |
Biondo, L.L.C. |
New
Jersey |
||||
28 |
Bland Payne (South Aust.) Pty Limited |
Australia |
||||
29 |
Bowring (Bermuda) Investments Ltd. |
Bermuda |
||||
30 |
Bowring Marine Limited |
England and Wales |
||||
31 |
Bowring Risk Management Limited (In Liquidation) |
England and Wales |
||||
32 |
Broadentry Limited |
England and Wales |
||||
33 |
BRW
Insurance & Financial Services Limited |
Ireland |
||||
34 |
BRW
Insurance Brokers Limited |
Ireland |
||||
35 |
ByS
Servicios Especiales, Agente de Seguros, S.A. de C.V. |
Mexico |
||||
36 |
C.T.
Bowring & Co. (Insurance) Limited (In Liquidation) |
England and Wales |
||||
37 |
C.T.
Bowring Ireland Limited |
Ireland |
||||
38 |
C.T.
Bowring Limited |
England and Wales |
||||
39 |
California Insurance Services, Inc. |
California |
||||
40 |
Capatho AB |
Sweden |
||||
41 |
CarLease Luxembourg SA |
Luxembourg |
||||
42 |
Casualty Insurance Company Services, Inc. |
California |
||||
43 |
Cecar Brasil Administracao e Corretagem de Seguros Ltda. |
Brazil |
||||
44 |
Claims and Recovery Management (Australia) Pty Limited |
Australia |
||||
45 |
Claims, Inc |
Texas |
||||
46 |
Concord Securities Services, Inc. |
Maryland |
||||
47 |
Confidentia Life Insurance Agency Ltd. |
Israel |
||||
48 |
Confidentia Marine Insurance Agency (1983) Ltd. |
Israel |
||||
49 |
Constantinidi Marsh SA |
Uruguay |
||||
50 |
Consultores 2020 C.A. |
Venezuela |
||||
51 |
Consultores en Garantias, S.A. de C.V. |
Mexico |
||||
52 |
Corplex Inc. |
New
York |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
53 |
Corporate Resources Group (Holdings) Ltd. |
British Virgin Islands |
||||
54 |
Corporate Resources Group (UK) Limited |
England and Wales |
||||
55 |
Corporate Risk Limited |
Scotland |
||||
56 |
Corporate Systems Holding, Inc. |
Nevada |
||||
57 |
Corporate Systems, Inc. |
Nevada |
||||
58 |
Countryside, Inc |
Tennessee |
||||
59 |
CRG
(India) Private Ltd. |
India |
||||
60 |
CRG
(Singapore) Pte Ltd |
Singapore |
||||
61 |
CRG
(Thailand) Ltd. |
Thailand |
||||
62 |
CRG
A/S |
Denmark |
||||
63 |
CRG
Finland OY |
Finland |
||||
64 |
CRG
HR SDN BHD |
Malaysia |
||||
65 |
CRG
Iberica, SL |
Spain |
||||
66 |
CRG
Ltd. |
Hong
Kong |
||||
67 |
CRG
S.A. |
Switzerland |
||||
68 |
CRG
Sverige AB |
Sweden |
||||
69 |
Crucible, Inc. |
Virginia |
||||
70 |
Cruiselook Limited |
England and Wales |
||||
71 |
CS
STARS LLC |
Delaware |
||||
72 |
Cullen Egan Dell (NZ) Limited |
New
Zealand |
||||
73 |
Cumberland Brokerage Limited |
Bermuda |
||||
74 |
CVA
Consultants, Inc. |
Nevada |
||||
75 |
DCC
Singapore Ventures Pte Ltd. |
Singapore |
||||
76 |
Decision Research Corporation |
Massachusetts |
||||
77 |
Digitsuper Limited |
England and Wales |
||||
78 |
Don
A. Harris & Associates, Inc. |
Nevada |
||||
79 |
Encompass Insurance Agency Pty Ltd. |
Australia |
||||
80 |
Encon Group Inc. |
Canada |
||||
81 |
Encon Holdings, Inc. |
Ontario |
||||
82 |
Encon Reinsurance Managers Inc. |
Canada |
||||
83 |
English Pension Trustees Limited |
England and Wales |
||||
84 |
Epsilon Insurance Company, Ltd. |
Cayman Islands |
||||
85 |
Espana Cinco, Inc. |
Delaware |
||||
86 |
Espana Cuatro, Inc. |
Delaware |
||||
87 |
Espana Dos, Inc. |
Delaware |
||||
88 |
Espana Ocho, Inc. |
Delaware |
||||
89 |
Espana Seis, Inc. |
Delaware |
||||
90 |
Espana Siete, Inc. |
Delaware |
||||
91 |
Espana Tres, Inc. |
Delaware |
||||
92 |
Espana Uno, Inc. |
Delaware |
||||
93 |
Excess and Treaty Management Corporation |
New
York |
||||
94 |
Exmoor Management Company Limited |
Bermuda |
||||
95 |
Fact
Finders (Asia) Ltd. |
Isle
of Man |
||||
96 |
Fact
Finders (Singapore) Pte Ltd. |
Singapore |
||||
97 |
FD
Direct Limited |
England and Wales |
||||
98 |
FDC
Acquisition, Inc. |
Colorado |
||||
99 |
Fenchurch Insurance Brokers Pty. Limited |
Australia |
||||
100 |
Fielding Premium Finance Pty Ltd. |
Australia |
||||
101 |
Financial Research, Inc. |
Pennsylvania |
||||
102 |
FPR
Limited |
England and Wales |
||||
103 |
G.
E. Freeman Insurance Agency Limited |
Canada |
||||
104 |
Galbraith & Green, Inc of Ohio |
Ohio |
||||
105 |
Gem
Insurance Company Limited |
Bermuda |
||||
106 |
Gradmann & Holler GbR |
Germany |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
107 |
GSC
Grupo de Servicos a Cortoes de Credito S/C Ltda. |
Brazil |
||||
108 |
Guy
Carpenter & Cia., S.A. |
Spain |
||||
109 |
Guy
Carpenter & Co. Labuan Ltd. |
Malaysia |
||||
110 |
Guy
Carpenter & Company (Pty) Limited |
South
Africa |
||||
111 |
Guy
Carpenter & Company (Uruguay) S.A. |
Uruguay |
||||
112 |
Guy
Carpenter & Company AB |
Sweden |
||||
113 |
Guy
Carpenter & Company B.V. |
Netherlands |
||||
114 |
Guy
Carpenter & Company Corredores de Reaseguros Ltda |
Chile |
||||
115 |
Guy
Carpenter & Company GmbH |
Germany |
||||
116 |
Guy
Carpenter & Company Limited |
Hong
Kong |
||||
117 |
Guy
Carpenter & Company Limited |
Ireland |
||||
118 |
Guy
Carpenter & Company Limited |
England and Wales |
||||
119 |
Guy
Carpenter & Company Peru Corredores de Reaseguros S.A. |
Peru |
||||
120 |
Guy
Carpenter & Company Private Limited |
Singapore |
||||
121 |
Guy
Carpenter & Company Pty. Limited |
Australia |
||||
122 |
Guy
Carpenter & Company S.r.l. |
Italy |
||||
123 |
Guy
Carpenter & Company Venezuela, C.A. |
Venezuela |
||||
124 |
Guy
Carpenter & Company, Inc. |
Delaware |
||||
125 |
Guy
Carpenter & Company, Ltd. |
Canada |
||||
126 |
Guy
Carpenter & Company, Ltda. |
Brazil |
||||
127 |
Guy
Carpenter & Company, S.A. |
Belgium |
||||
128 |
Guy
Carpenter & Company, S.A. |
France |
||||
129 |
Guy
Carpenter & Company, S.A. |
Argentina |
||||
130 |
Guy
Carpenter Broking, Inc. |
Delaware |
||||
131 |
Guy
Carpenter Facultative Pty. Ltd. |
Australia |
||||
132 |
Guy
Carpenter Facultatives S.A.S. |
France |
||||
133 |
Guy
Carpenter Insurance Strategy, Inc. |
Delaware |
||||
134 |
Guy
Carpenter Japan, Inc. |
Japan |
||||
135 |
Guy
Carpenter Mexico Intermediario de Reaseguro, S.A. de C.V. |
Mexico |
||||
136 |
Hansen International Limited |
Delaware |
||||
137 |
Healthcare Agencies Limited (In Liquidation) |
England and Wales |
||||
138 |
Healthcare Risk Management Services, Inc. |
Washington |
||||
139 |
Heath Aviation Insurance Broking Pty Ltd |
Australia |
||||
140 |
Heath Fielding Asia Pacific Pty Ltd. |
Australia |
||||
141 |
Heath Fiji |
Fiji |
||||
142 |
Heath Lambert Australia Pty Ltd. |
Australia |
||||
143 |
Heath Lambert New Zealand Ltd. |
New
Zealand |
||||
144 |
Heath Lambert Professional Indemnity Pty Ltd. |
Australia |
||||
145 |
Heath Lambert Re Pty Limited |
Australia |
||||
146 |
Heath Lambert Workers Compensation Pty Limited |
Australia |
||||
147 |
Henry Ward Johnson & Company Insurance Services, Inc. |
California |
||||
148 |
HL
Minors Pty Ltd. |
Australia |
||||
149 |
HLG
Australasia (SA) Pty LTd. |
Australia |
||||
150 |
HLG
Australasia Pty Ltd. |
Australia |
||||
151 |
HLG
Underwriting Agency Limited |
New
Zealand |
||||
152 |
IFR
Investigative Research, Inc. |
Canada |
||||
153 |
IFS
Insurance Broking Pty Limited |
Australia |
||||
154 |
InPhoto Surveillance, Inc. |
Illinois |
||||
155 |
Insbrokers Ltda. |
Uruguay |
||||
156 |
Insurance Finance Australia Pty Ltd. |
Australia |
||||
157 |
Inter-Ocean Management (Cayman) Limited |
Cayman Islands |
||||
158 |
Interlink Securities Corp. |
California |
||||
159 |
Inverbys, S.A. de C.V. |
Mexico |
||||
160 |
Invercol Limited |
Bermuda |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
161 |
Irish Pensions Trust Limited |
Ireland |
||||
162 |
J&H Benefits Plus Inc. |
Philippines |
||||
163 |
J&H Marsh & McLennan (UK) Limited |
England and Wales |
||||
164 |
J&H Marsh & McLennan Ireland Limited |
Ireland |
||||
165 |
J&H Marsh & McLennan Limited (HK) |
Hong
Kong |
||||
166 |
J&H Marsh & McLennan Norway A.S. |
Norway |
||||
167 |
James Wigham Poland International Limited |
England and Wales |
||||
168 |
JHM
Holdings, Inc. |
New
York |
||||
169 |
Johnson & Higgins (Bermuda) Limited |
Bermuda |
||||
170 |
Johnson & Higgins (Peru) S.A. Corredores De Seguro |
Peru |
||||
171 |
Johnson & Higgins (USVI) Ltd. |
Virgin Islands |
||||
172 |
Johnson & Higgins Holdings Limited |
England and Wales |
||||
173 |
Johnson & Higgins Intermediaries (Cayman) Ltd. |
Cayman Islands |
||||
174 |
Johnson & Higgins Ireland Limited |
Ireland |
||||
175 |
Johnson & Higgins Limited |
England and Wales |
||||
176 |
Johnson & Higgins Management Services, Ltd. |
Bermuda |
||||
177 |
Johnson & Higgins Willis Faber (U.S.A.) Inc. |
New
York |
||||
178 |
Johnson & Higgins Willis Faber Holdings, Inc. |
New
York |
||||
179 |
K.A.
Uruguay SRL |
Uruguay |
||||
180 |
KA
de Mexico de S de R de CV |
Mexico |
||||
181 |
KA
Services de Mexico |
Mexico |
||||
182 |
Kagis, LLC |
Delaware |
||||
183 |
KCMS
II LLC |
Delaware |
||||
184 |
KCMS, Inc. |
Delaware |
||||
185 |
Kininmonth Lambert Australia Pty Ltd. |
Australia |
||||
186 |
Kroll Associates (Asia) Limited |
Hong
Kong |
||||
187 |
Kroll Associates (Asia) Limited |
Hong
Kong |
||||
188 |
Kroll Associates (Australia) Pty Limited |
Australia |
||||
189 |
Kroll Associates (India) Private Ltd. |
India |
||||
190 |
Kroll Associates (Pty) Limited |
South
Africa |
||||
191 |
Kroll Associates Brasil Ltda. |
Brazil |
||||
192 |
Kroll Associates Iberia, S.L. |
Spain |
||||
193 |
Kroll Associates International Holdings Inc. |
Delaware |
||||
194 |
Kroll Associates Phillipines, Inc. |
Philippines |
||||
195 |
Kroll Associates Phillipines, Inc. |
Philippines |
||||
196 |
Kroll Associates Pte Ltd. |
Singapore |
||||
197 |
Kroll Associates SA |
Belgium |
||||
198 |
Kroll Associates Srl |
Italy |
||||
199 |
Kroll Associates UK Limited |
England and Wales |
||||
200 |
Kroll Associates, Inc. |
Delaware |
||||
201 |
Kroll Background America Corporation Canada |
Canada |
||||
202 |
Kroll Background America, Inc. |
Tennessee |
||||
203 |
Kroll Background of America of Florida |
Tennessee |
||||
204 |
Kroll Background Worldwide Limited |
United Kingdom |
||||
205 |
Kroll Buchler Phillips Limited |
England and Wales |
||||
206 |
Kroll Certico Acquisition Inc. |
Delaware |
||||
207 |
Kroll Chile S.A. |
Chile |
||||
208 |
Kroll Cooper Management LLC |
New
Jersey |
||||
209 |
Kroll Corporate Finance Limited |
United Kingdom |
||||
210 |
Kroll Crisis Management Group, Inc. |
Virginia |
||||
211 |
Kroll Electronic Recovery, Inc. |
Delaware |
||||
212 |
Kroll Fact Finders Ltd. |
Hong
Kong |
||||
213 |
Kroll Factual Data, Inc. |
Colorado |
||||
214 |
Kroll Forensic Accounting Limited |
England and Wales |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
215 |
Kroll Forensic Accounting Limited |
England and Wales |
||||
216 |
Kroll Government Services International, Inc. |
Delaware |
||||
217 |
Kroll Government Services, Inc. |
Delaware |
||||
218 |
Kroll Holdings Limited |
United Kingdom |
||||
219 |
Kroll Holdings SA |
Argentina |
||||
220 |
Kroll Holdings, Inc. |
Delaware |
||||
221 |
Kroll Inc. |
Delaware |
||||
222 |
Kroll Information Services, Inc. |
Delaware |
||||
223 |
Kroll International, Inc. |
Delaware |
||||
224 |
Kroll Laboratory Specialists, Inc. |
Louisiana |
||||
225 |
Kroll Limited |
United Kingdom |
||||
226 |
Kroll Lindquist Avey Co. |
Canada |
||||
227 |
Kroll Lindquist Avey Limited |
United Kingdom |
||||
228 |
Kroll Lindquist Avey, Inc. |
Texas |
||||
229 |
Kroll MIE (Pty) Limited |
South
Africa |
||||
230 |
Kroll Municipal Services, Inc. |
Delaware |
||||
231 |
Kroll Ontrack GmbH (Germany) |
Germany |
||||
232 |
Kroll Ontrack Iberia, S.L.U |
Spain |
||||
233 |
Kroll Ontrack Legal Technologies Limited |
United Kingdom |
||||
234 |
Kroll Ontrack Limited |
United Kingdom |
||||
235 |
Kroll Ontrack sarl |
France |
||||
236 |
Kroll Ontrack, Inc. |
Minnesota |
||||
237 |
Kroll Real Estate Services, Inc. |
Delaware |
||||
238 |
Kroll Restructuring Ltd. |
Canada |
||||
239 |
Kroll Schiff Associates, Inc. |
Texas |
||||
240 |
Kroll Security International (Afghanistan) Limited |
United Kingdom |
||||
241 |
Kroll Security International Limited |
England and Wales |
||||
242 |
Kroll Stevens Corporation |
Delaware |
||||
243 |
Kroll Talbot Hughes Limited |
England and Wales |
||||
244 |
Kroll Zolfo Cooper Limited |
England and Wales |
||||
245 |
Kroll Zolfo Cooper, LLC |
New
Jersey |
||||
246 |
KZC
Catalyst Partners, LLC |
Delaware |
||||
247 |
KZC
Services LLC |
New
Jersey |
||||
248 |
Laboratory Specialists of America, Inc. |
Oklahoma |
||||
249 |
LAMB
Acquisition II, Inc. |
Ohio |
||||
250 |
LAMB
Acquisition, Inc. |
Ohio |
||||
251 |
Lambco International, Inc. |
Georgia |
||||
252 |
Law
and Business Economics Limited |
England and Wales |
||||
253 |
Legal & Commercial Insurances Limited |
Ireland |
||||
254 |
Les
Conseillers Dpt. Inc. |
Canada |
||||
255 |
Liberty Place Underwriters, Inc. |
Delaware |
||||
256 |
Lippincott & Margulies, Inc. |
New
York |
||||
257 |
LL
Australia Pty Ltd. |
Australia |
||||
258 |
LL
Pty Ltd. |
Australia |
||||
259 |
Llenrup Participaues S.C. Ltda. |
Brazil |
||||
260 |
Lowndes Lambert Pty Ltd. |
Australia |
||||
261 |
Lowndes Lambert Pty Ltd. |
Australia |
||||
262 |
M&M Vehicle, L.P. |
Delaware |
||||
263 |
M.B.
Fitzpatrick Limited |
Ireland |
||||
264 |
Maginnis & Associates Agency of Ohio, Inc. |
Ohio |
||||
265 |
Marclen Holdings, Inc. |
Delaware |
||||
266 |
Marclen LLC |
Delaware |
||||
267 |
Mariners Insurance Agency, Inc. |
Massachusetts |
||||
268 |
Maritime Adjusters, Inc. |
Massachusetts |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
269 |
Marsh & Co. S.p.A. |
Italy |
||||
270 |
Marsh & McLennan (PNG) Limited |
Papua
New Guinea |
||||
271 |
Marsh & McLennan (Singapore) Pte Ltd |
Singapore |
||||
272 |
Marsh & McLennan (South Australia) Pty Ltd |
Australia |
||||
273 |
Marsh & McLennan (WA) Pty. Ltd. |
Australia |
||||
274 |
Marsh & McLennan Agencies Pty. Ltd. |
Australia |
||||
275 |
Marsh & McLennan Argentina SA Corredores de Reaseguros |
Argentina |
||||
276 |
Marsh & McLennan C&I GP, Inc. |
Delaware |
||||
277 |
Marsh & McLennan Companies UK Limited |
England and Wales |
||||
278 |
Marsh & McLennan Companies, Inc. |
Delaware |
||||
279 |
Marsh & McLennan Financial Markets, Inc. |
Delaware |
||||
280 |
Marsh & McLennan Finland Oy |
Finland |
||||
281 |
Marsh & McLennan GbR Holdings, Inc. |
Delaware |
||||
282 |
Marsh & McLennan Global Broking (Bermuda) Ltd. |
Bermuda |
||||
283 |
Marsh & McLennan GP I, Inc. |
Delaware |
||||
284 |
Marsh & McLennan GP II, Inc. |
Delaware |
||||
285 |
Marsh & McLennan Holdings GmbH |
Germany |
||||
286 |
Marsh & McLennan Holdings II, Inc. |
Delaware |
||||
287 |
Marsh & McLennan Holdings Limited |
England and Wales |
||||
288 |
Marsh & McLennan Holdings, Inc. |
Delaware |
||||
289 |
Marsh & McLennan Management Services (Bermuda) Limited |
Bermuda |
||||
290 |
Marsh & McLennan Pallas Holdings GmbH |
Germany |
||||
291 |
Marsh & McLennan Pallas Holdings, Inc. |
Delaware |
||||
292 |
Marsh & McLennan Properties (Bermuda) Ltd. |
Bermuda |
||||
293 |
Marsh & McLennan Real Estate Advisors, Inc. |
Delaware |
||||
294 |
Marsh & McLennan Risk Capital Holdings, Ltd. |
Delaware |
||||
295 |
Marsh & McLennan Securities Group Limited (in liquidation) |
England and Wales |
||||
296 |
Marsh & McLennan Securities International, Ltd. |
Bermuda |
||||
297 |
Marsh & McLennan Services Limited |
England and Wales |
||||
298 |
Marsh & McLennan Servicios, S.A. De C.V. |
Mexico |
||||
299 |
Marsh & McLennan Sweden AB |
Sweden |
||||
300 |
Marsh & McLennan Tech GP II, Inc. |
Delaware |
||||
301 |
Marsh & McLennan, Incorporated |
Virgin Islands |
||||
302 |
Marsh (Hong Kong) Limited |
Hong
Kong |
||||
303 |
Marsh (Insurance Brokers) LLP |
Kazakhstan |
||||
304 |
Marsh (Insurance Services) Limited |
England and Wales |
||||
305 |
Marsh (Isle of Man) Limited |
Isle
of Man |
||||
306 |
Marsh (Jersey) Limited (in liquidation) |
Jersey |
||||
307 |
Marsh (Middle East) Limited |
England and Wales |
||||
308 |
Marsh (Namibia) (Proprietary) Limited |
Namibia |
||||
309 |
Marsh (Proprietary) Limited |
Botswana |
||||
310 |
Marsh (Singapore) Pte Ltd. |
Singapore |
||||
311 |
Marsh (South Africa) (Proprietary) Limited |
South
Africa |
||||
312 |
MarshInsurance Brokers ZAO |
Russia |
||||
313 |
Marsh A/S |
Denmark |
||||
314 |
Marsh AB |
Sweden |
||||
315 |
Marsh Advanced Risk Solutions Limited |
England and Wales |
||||
316 |
Marsh Africa (Pty) Limited |
South
Africa |
||||
317 |
Marsh AG |
Switzerland |
||||
318 |
Marsh Argentina S.R.L. |
Argentina |
||||
319 |
Marsh Asia Pacific Management Pty. Ltd. |
Australia |
||||
320 |
Marsh Assessoria e Consultoria Empresarial S/C Ltda. |
Brazil |
||||
321 |
Marsh Assistencia e Administracao S/C Ltda. |
Brazil |
||||
322 |
Marsh Austria G.m.b.H. |
Austria |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
323 |
Marsh B.V. |
Netherlands |
||||
324 |
Marsh Brockman y Schuh Agente de Seguros y de Fianzas, S.A. de C.V. |
Mexico |
||||
325 |
Marsh Broker Japan, Inc. |
Japan |
||||
326 |
Marsh Captive Management Services Pty. Ltd. |
Australia |
||||
327 |
Marsh Caspian Services LLC |
Azerbaijan |
||||
328 |
Marsh Commercial Insurance Agencies Pty Ltd. |
Australia |
||||
329 |
Marsh Conseil S.A.S. |
France |
||||
330 |
Marsh Corporate Services (Barbados) Limited |
Barbados |
||||
331 |
Marsh Corporate Services Isle of Man Ltd |
Isle
of Man |
||||
332 |
Marsh Corporate Services Limited |
England and Wales |
||||
333 |
Marsh Corretora de Seguros Ltda. |
Brazil |
||||
334 |
Marsh d.o.o. Beograd |
Serbia & Montenegro |
||||
335 |
Marsh d.o.o. za posredovanje u osiguranju |
Croatia |
||||
336 |
Marsh Direct |
Korea |
||||
337 |
Marsh E00D |
Bulgaria |
||||
338 |
Marsh Eurofinance BV |
Netherlands |
||||
339 |
Marsh Europe S.A. |
Belgium |
||||
340 |
Marsh Executive Benefits, Inc. |
New
York |
||||
341 |
Marsh Finance B.V. |
Rotterdam |
||||
342 |
Marsh Financial Insurance Services of Massachusetts, Inc. |
Massachusetts |
||||
343 |
Marsh Financial Services (Guernsey) Limited (in liquidation) |
Guernsey |
||||
344 |
Marsh Financial Services International Ltd. |
Bermuda |
||||
345 |
Marsh Financial Services Limited |
England and Wales |
||||
346 |
Marsh Financial Services Limited |
Ireland |
||||
347 |
Marsh Financial Services of Texas, Inc. |
Texas |
||||
348 |
Marsh Financial Services, Inc. |
Indiana |
||||
349 |
Marsh Global Broking (Dublin) Limited |
Ireland |
||||
350 |
Marsh Global Broking Inc. (Connecticut) |
Connecticut |
||||
351 |
Marsh Global Broking Inc. (Missouri) |
Missouri |
||||
352 |
Marsh Global Broking Inc. (New Jersey) |
New
Jersey |
||||
353 |
Marsh Global Broking Inc. (Texas) |
Texas |
||||
354 |
Marsh Global Markets (Bermuda) Limited |
Bermuda |
||||
355 |
Marsh Global Markets GmbH |
Germany |
||||
356 |
Marsh GmbH |
Germany |
||||
357 |
Marsh Holding AB |
Sweden |
||||
358 |
Marsh Holdings (Proprietary) Limited |
South
Africa |
||||
359 |
Marsh Holdings B.V. |
Netherlands |
||||
360 |
Marsh Inc. |
Delaware |
||||
361 |
Marsh Insurance & Investments Corp. |
Delaware |
||||
362 |
Marsh Insurance and Risk Management Consultants Ltd. |
China |
||||
363 |
Marsh Insurance Brokers (Macau) Limited |
Macao |
||||
364 |
Marsh Insurance Brokers (Private) Limited |
Zimbabwe |
||||
365 |
Marsh Insurance Brokers Limited |
England and Wales |
||||
366 |
Marsh Insurance Services Spolka z.o.o. |
Poland |
||||
367 |
Marsh Intermediaries, Inc. |
New
York |
||||
368 |
Marsh International Broking Holdings Limited |
England and Wales |
||||
369 |
Marsh International Holdings (Korea) Inc. |
Delaware |
||||
370 |
Marsh International Holdings II, Inc. |
Delaware |
||||
371 |
Marsh International Holdings, Inc. |
Delaware |
||||
372 |
Marsh International Limited |
England and Wales |
||||
373 |
Marsh Investment Services Limited |
England and Wales |
||||
374 |
Marsh Ireland Holdings Limited |
Ireland |
||||
375 |
Marsh Ireland Limited |
Ireland |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
376 |
Marsh Israel (1999) Ltd. |
Israel |
||||
377 |
Marsh Israel (Holdings) Ltd. |
Israel |
||||
378 |
Marsh Israel Consultants Ltd. |
Israel |
||||
379 |
Marsh Israel Insurance Agency Ltd. |
Israel |
||||
380 |
Marsh Japan, Inc. |
Japan |
||||
381 |
Marsh Kft. |
Hungary |
||||
382 |
Marsh Kindlustusmaakler AS |
Estonia |
||||
383 |
Marsh Korea, Inc. |
Korea |
||||
384 |
Marsh Life & Pension Oy |
Finland |
||||
385 |
Marsh Limited |
New
Zealand |
||||
386 |
Marsh Limited |
England and Wales |
||||
387 |
Marsh Limited |
Papua
New Guinea |
||||
388 |
Marsh Link Limited |
England and Wales |
||||
389 |
Marsh LLC |
Ukraine |
||||
390 |
Marsh LLC Insurance Brokers |
Greece |
||||
391 |
Marsh Ltd. |
Wisconsin |
||||
392 |
Marsh Ltd. Taiwan Branch |
Taiwan |
||||
393 |
Marsh Luxembourg SA |
Luxembourg |
||||
394 |
Marsh Management Services (Barbados), Ltd. |
Barbados |
||||
395 |
Marsh Management Services (Bermuda) Ltd. |
Bermuda |
||||
396 |
Marsh Management Services (British Virgin Islands) Ltd |
British Virgin Islands |
||||
397 |
Marsh Management Services (Cayman) Ltd. |
Cayman Islands |
||||
398 |
Marsh Management Services (Dublin) Limited |
Ireland |
||||
399 |
Marsh Management Services (Labuan) Limited |
Malaysia |
||||
400 |
Marsh Management Services (Luxembourg) SA |
Luxembourg |
||||
401 |
Marsh Management Services (USVI) Ltd. |
Virgin Islands |
||||
402 |
Marsh Management Services Guernsey Limited |
Guernsey |
||||
403 |
Marsh Management Services Inc. |
New
York |
||||
404 |
Marsh Management Services Isle of Man Limited |
Isle
of Man |
||||
405 |
Marsh Management Services Jersey Limited |
Jersey |
||||
406 |
Marsh Management Services Jersey Limited |
Jersey |
||||
407 |
Marsh Management Services Malta Limited |
Malta |
||||
408 |
Marsh Management Services Singapore Pte. Ltd. |
Singapore |
||||
409 |
Marsh Management Services Sweden AB |
Sweden |
||||
410 |
Marsh Marine & Energy AB |
Sweden |
||||
411 |
Marsh Marine & Energy AS |
Norway |
||||
412 |
Marsh Marine & Energy Limited |
England and Wales |
||||
413 |
Marsh Mercer Holdings Australia Pty Ltd |
Australia |
||||
414 |
Marsh Micronesia |
Guam |
||||
415 |
Marsh Norway AS |
Norway |
||||
416 |
Marsh Oy |
Finland |
||||
417 |
Marsh Peru SA Corredores de Seguros |
Peru |
||||
418 |
Marsh Philippines, Inc. |
Philippines |
||||
419 |
Marsh Placement Inc. |
Illinois |
||||
420 |
Marsh Placement Services Limited (In Liquidation) |
England and Wales |
||||
421 |
Marsh Private Client Life Insurance Services |
California |
||||
422 |
Marsh Pty. Ltd. |
Australia |
||||
423 |
Marsh Risk Consulting B.V. |
Netherlands |
||||
424 |
Marsh Risk Consulting Services S.r.L. |
Italy |
||||
425 |
Marsh Risk Management Pvt Ltd. |
India |
||||
426 |
Marsh S.A. |
France |
||||
427 |
Marsh S.A. Corredores De Seguros |
Chile |
||||
428 |
Marsh S.p.A. |
Italy |
||||
429 |
Marsh S.R.L. |
Romania |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
430 |
Marsh s.r.o. |
Czech
Republic |
||||
431 |
Marsh s.r.o. |
Slovak Republic |
||||
432 |
Marsh SA (Argentina) |
Argentina |
||||
433 |
Marsh Saldana Inc. |
Puerto Rico |
||||
434 |
Marsh Secretarial Services Limited |
England and Wales |
||||
435 |
Marsh Services Limited |
England and Wales |
||||
436 |
Marsh Services S.A.S. |
France |
||||
437 |
Marsh SIA |
Latvia |
||||
438 |
Marsh Sigorta ve Reasurans Brokerligi A.S. |
Turkey |
||||
439 |
Marsh Spolka z.o.o. |
Poland |
||||
440 |
Marsh Szolgáltató Kft. |
Hungary |
||||
441 |
Marsh Treasury Services (Dublin) Limited |
Ireland |
||||
442 |
Marsh Treasury Services Limited |
England and Wales |
||||
443 |
Marsh UK Group Limited |
England and Wales |
||||
444 |
Marsh UK Holdings Limited |
England and Wales |
||||
445 |
Marsh UK Limited |
England and Wales |
||||
446 |
Marsh Ukraine Limited (In Liquidation) |
England and Wales |
||||
447 |
Marsh USA (India) Inc. |
Delaware |
||||
448 |
Marsh USA Benefits Inc. |
Texas |
||||
449 |
Marsh USA Inc. |
Delaware |
||||
450 |
Marsh USA, Inc. |
China |
||||
451 |
Marsh Venezuela C.A. Sociedad de Corretaje de Seguros |
Venezuela |
||||
452 |
Marsh Vietnam Insurance Broking Company Ltd |
Vietnam |
||||
453 |
Marsh, Lda. |
Portugal |
||||
454 |
Matthiessen Assurans AB |
Sweden |
||||
455 |
Matthiessen Reinsurance Ltd AB |
Sweden |
||||
456 |
Mearbridge LLC |
Delaware |
||||
457 |
Mediservice Administradora De Planos De Saude Ltda.B |
Brazil |
||||
458 |
Medisure Affinity Services Limited |
England and Wales |
||||
459 |
Medisure Corporate Services Limited |
England and Wales |
||||
460 |
Medisure Trustees Limited |
England and Wales |
||||
461 |
Mees
& Zoonen Argentina SA |
Argentina |
||||
462 |
Members Insurance Club Agency, Inc. |
Louisiana |
||||
463 |
Members Insurance Club Agency, Inc. |
Ohio |
||||
464 |
Mercer Asesores de Seguros SA |
Argentina |
||||
465 |
Mercer Australia Limited |
Australia |
||||
466 |
Mercer Broking Ltd. |
Taiwan |
||||
467 |
Mercer Consulting Group Verwaltungs GmbH |
Germany |
||||
468 |
Mercer Consulting Holdings Sdn. Bhd. |
Malaysia |
||||
469 |
Mercer Consulting Limited |
England and Wales |
||||
470 |
Mercer Corredores de Seguros Ltda. |
Chile |
||||
471 |
Mercer Corretora de Seguros Ltda |
Brazil |
||||
472 |
Mercer Delta Consulting Limited |
England and Wales |
||||
473 |
Mercer Delta Consulting Limited |
Canada |
||||
474 |
Mercer Delta Consulting LLC |
Delaware |
||||
475 |
Mercer Delta Consulting SAS |
France |
||||
476 |
Mercer Employee Benefit Services Limited |
United Kingdom |
||||
477 |
Mercer Employee BenefitsMediacao de Seguros, Lda. |
Portugal |
||||
478 |
Mercer Employee Benefits OY |
Finland |
||||
479 |
Mercer Global Investments, Inc. |
Delaware |
||||
480 |
Mercer Health & Benefits LLC |
Delaware |
||||
481 |
Mercer Holdings Canada, Inc. |
Delaware |
||||
482 |
Mercer Holdings, Inc. |
Delaware |
||||
483 |
Mercer HR Services, LLC |
Delaware |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
484 |
Mercer Human Resource Consulting (EB) Limited |
England and Wales |
||||
485 |
Mercer Human Resource Consulting (S) Pte Ltd |
Singapore |
||||
486 |
Mercer Human Resource Consulting a.s. |
Czech
Republic |
||||
487 |
Mercer Human Resource Consulting A/S |
Denmark |
||||
488 |
Mercer Human Resource Consulting and Insurance Brokers Limited |
Hungary |
||||
489 |
Mercer Human Resource Consulting AS |
Norway |
||||
490 |
Mercer Human Resource Consulting B.V. |
Netherlands |
||||
491 |
Mercer Human Resource Consulting GmbH |
Germany |
||||
492 |
Mercer Human Resource Consulting GmbH |
Austria |
||||
493 |
Mercer Human Resource Consulting Korea Ltd. |
Korea |
||||
494 |
Mercer Human Resource Consulting Lda. |
Portugal |
||||
495 |
Mercer Human Resource Consulting Limited |
Ireland |
||||
496 |
Mercer Human Resource Consulting Limited |
Canada |
||||
497 |
Mercer Human Resource Consulting Limited |
Canada |
||||
498 |
Mercer Human Resource Consulting Limited |
Hong
Kong |
||||
499 |
Mercer Human Resource Consulting Limited |
England and Wales |
||||
500 |
Mercer Human Resource Consulting LLC |
Delaware |
||||
501 |
Mercer Human Resource Consulting Ltd |
Japan |
||||
502 |
Mercer Human Resource Consulting Ltd |
Thailand |
||||
503 |
Mercer Human Resource Consulting Ltd. |
Taiwan |
||||
504 |
Mercer Human Resource Consulting Ltda |
Brazil |
||||
505 |
Mercer Human Resource Consulting Ltda. |
Chile |
||||
506 |
Mercer Human Resource Consulting of Puerto Rico, Inc. |
Puerto Rico |
||||
507 |
Mercer Human Resource Consulting OY |
Finland |
||||
508 |
Mercer Human Resource Consulting Pty Ltd |
Australia |
||||
509 |
Mercer Human Resource Consulting Pvt Ltd |
India |
||||
510 |
Mercer Human Resource Consulting S.A. |
France |
||||
511 |
Mercer Human Resource Consulting S.A. de C.V. |
Mexico |
||||
512 |
Mercer Human Resource Consulting SA |
Argentina |
||||
513 |
Mercer Human Resource Consulting SA |
Switzerland |
||||
514 |
Mercer Human Resource Consulting SA-NV |
Belgium |
||||
515 |
Mercer Human Resource Consulting Sdn. Bhd. |
Malaysia |
||||
516 |
Mercer Human Resource Consulting SP. Z.O.O. |
Poland |
||||
517 |
Mercer Human Resource Consulting Srl |
Italy |
||||
518 |
Mercer Human Resource Consulting, Inc. |
Delaware |
||||
519 |
Mercer Human Resource Consulting, S.L. |
Spain |
||||
520 |
Mercer Inc. |
Delaware |
||||
521 |
Mercer Investment Consulting Limited |
Ireland |
||||
522 |
Mercer Investment Consulting, Inc. |
Kentucky |
||||
523 |
Mercer Investment Nominees Ltd |
Australia |
||||
524 |
Mercer Ireland Holdings Limited |
Ireland |
||||
525 |
Mercer Legal (NSW) Pty Ltd |
Australia |
||||
526 |
Mercer Limited |
England and Wales |
||||
527 |
Mercer Management Consulting AG |
Switzerland |
||||
528 |
Mercer Management Consulting GmbH |
Germany |
||||
529 |
Mercer Management Consulting Group GmbH & Co. KG |
Germany |
||||
530 |
Mercer Management Consulting Holding GmbH |
Germany |
||||
531 |
Mercer Management Consulting Limited |
Canada |
||||
532 |
Mercer Management Consulting Limited |
England and Wales |
||||
533 |
Mercer Management Consulting S.L. |
Spain |
||||
534 |
Mercer Management Consulting Servicios, S. DE RL. DE CV |
Mexico |
||||
535 |
Mercer Management Consulting SNC |
France |
||||
536 |
Mercer Management Consulting Sociedade Unipessoal, Lda |
Portugal |
||||
537 |
Mercer Management Consulting, Inc. |
Delaware |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
538 |
Mercer Management Consulting, Ltd. |
Bermuda |
||||
539 |
Mercer Oliver Wyman Actuarial Consulting, Inc |
Delaware |
||||
540 |
Mercer Oliver Wyman Consulting Limited |
Canada |
||||
541 |
Mercer Oliver Wyman Corporate Risk Consulting, Inc. |
Delaware |
||||
542 |
Mercer Oliver Wyman Limited |
England and Wales |
||||
543 |
Mercer Oliver Wyman Pty Ltd |
Victoria |
||||
544 |
Mercer Pensionsraadgivning A/S |
Denmark |
||||
545 |
Mercer Personenversicherungs-makler GmbH |
Austria |
||||
546 |
Mercer SAS |
France |
||||
547 |
Mercer Securities, Inc. |
Delaware |
||||
548 |
Mercer Sweden AB |
Sweden |
||||
549 |
Mercer Tax Agents Pty Ltd |
Australia |
||||
550 |
Mercer Trust Company |
New
Hampshire |
||||
551 |
Mercer Trustees Limited |
England and Wales |
||||
552 |
Mercer UK Limited |
England and Wales |
||||
553 |
Mercer Zainal Consulting Sdn Bhd |
Malaysia |
||||
554 |
MercerHR.com LLC |
Delaware |
||||
555 |
MercerHR.com, Inc. |
Delaware |
||||
556 |
MMC
28 State Street Holdings Inc. |
Delaware |
||||
557 |
MMC
Capital C&I GP, Inc. |
Delaware |
||||
558 |
MMC
Capital Limited |
England and Wales |
||||
559 |
MMC
Capital Tech GP II, Inc. |
Delaware |
||||
560 |
MMC
Capital, Inc. |
Delaware |
||||
561 |
MMC
Executive Services, Inc. |
Delaware |
||||
562 |
MMC
France S.A. |
France |
||||
563 |
MMC
GP III, INC. |
Delaware |
||||
564 |
MMC
Realty, Inc. |
New
York |
||||
565 |
MMC
Securities Corp. |
Delaware |
||||
566 |
MMC
UK Pension Fund Trustee Limited |
England and Wales |
||||
567 |
MMOW
Limited |
England and Wales |
||||
568 |
MMRCH LLC |
Delaware |
||||
569 |
MMSC
Holdings, Inc. |
Delaware |
||||
570 |
MMSC
Risk Advisors, Inc. |
Delaware |
||||
571 |
MOW
Holding LLC |
Delaware |
||||
572 |
MPA
(International) Limited |
England and Wales |
||||
573 |
Muir
Beddal (Zimbabwe) Limited |
Zimbabwe |
||||
574 |
MVM
Versicherungsberatungs Gesellschaft m.b.H. |
Austria |
||||
575 |
N.V.
Algemene Verzekeringsmaatschappij ‘De Zee |
Amsterdam |
||||
576 |
Nandix |
Uruguay |
||||
577 |
National Economic Research Associates, Inc. |
California |
||||
578 |
National Economic Research Associates, Inc. |
Delaware |
||||
579 |
National Medical Audit |
California |
||||
580 |
National Psychopharmacology Laboratories, Inc. |
Tennessee |
||||
581 |
NERA
Australia Pty Ltd |
New
South Wales |
||||
582 |
NERA
do Brasil Ltda. |
Brazil |
||||
583 |
NERA
S.R.L. |
Italy |
||||
584 |
NERA
UK Limited |
England and Wales |
||||
585 |
Neuburger Noble Lowndes GmbH |
Germany |
||||
586 |
New
S.A. |
Peru |
||||
587 |
New
Zealand Limited |
New
Zealand |
||||
588 |
Normandy Reinsurance Company Limited |
Bermuda |
||||
589 |
OCR
Ltd. |
Australia |
||||
590 |
Omega Indemnity (Bermuda) Limited |
Bermuda |
||||
591 |
Ontrack Data Recovery, Inc. |
Minnesota |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
592 |
Organizacion Brockman y Schuh, S.A. de C.V. |
Mexico |
||||
593 |
Palamerican Corporation |
Delaware |
||||
594 |
Pallas Marsh Corretagem de Seguros Ltda. |
Brazil |
||||
595 |
Panagora Asset Management, Inc. |
Delaware |
||||
596 |
Pension Trustees Limited |
England and Wales |
||||
597 |
Personnel Risk Management Limited |
England and Wales |
||||
598 |
Peter Smart Associates Limited (In Liquidation) |
England and Wales |
||||
599 |
PFT
Limited |
England and Wales |
||||
600 |
PI
Indemnity Company, Limited |
Ireland |
||||
601 |
PII
Holdings, Inc. |
Massachusetts |
||||
602 |
Potomac Insurance Managers, Inc. |
Delaware |
||||
603 |
Prentis Donegan & Partners (Holdings) Limited |
England and Wales |
||||
604 |
Prentis Donegan & Partners Limited |
England and Wales |
||||
605 |
Price Forbes Australia Limited |
Australia |
||||
606 |
Price Forbes Limited |
England and Wales |
||||
607 |
PT
Marsh Indonesia |
Indonesia |
||||
608 |
PT
Mercer Human Resource Consulting |
Indonesia |
||||
609 |
PT
Quantum Computing Services |
Indonesia |
||||
610 |
PT
Quantum Investments |
Indonesia |
||||
611 |
PT
Quantum Support Services |
Indonesia |
||||
612 |
PT.
Peranas Agung |
Indonesia |
||||
613 |
Putnam Aviation Holdings, LLC |
Delaware |
||||
614 |
Putnam Capital, LLC |
Delaware |
||||
615 |
Putnam Fiduciary Trust Company |
Massachusetts |
||||
616 |
Putnam International Advisory Company S.A. |
Luxembourg |
||||
617 |
Putnam International Distributors, Ltd. |
Cayman Islands |
||||
618 |
Putnam Investment Holdings, LLC |
Delaware |
||||
619 |
Putnam Investments Argentina, S.A. |
Argentina |
||||
620 |
Putnam Investments Australia Pty Limited |
Australia |
||||
621 |
Putnam Investments Inc. |
Canada |
||||
622 |
Putnam Investments Limited |
Ireland |
||||
623 |
Putnam Investments Securities Co., Ltd. |
Japan |
||||
624 |
Putnam Investments Trust |
Massachusetts |
||||
625 |
Putnam Investments Trust II |
Massachusetts |
||||
626 |
Putnam Investments, LLC |
Delaware |
||||
627 |
Putnam Investor Services, Inc. |
Massachusetts |
||||
628 |
Putnam Retail Management GP, Inc. |
Massachusetts |
||||
629 |
Putnam Retail Management Limited Partnership |
Massachusetts |
||||
630 |
Putnam, LLC |
Delaware |
||||
631 |
Quality Facts, Inc. |
Tennessee |
||||
632 |
Quorum Acquisition Corporation |
Delaware |
||||
633 |
Quorum Lanier |
Philippines |
||||
634 |
Quorum Litigation Services, LLC |
Minnesota |
||||
635 |
R.
Mees & Zoonen Holdings B.V. |
Netherlands |
||||
636 |
R.W.
Gibbon & Son (Underwriting Agencies) Limited |
England and Wales |
||||
637 |
Reclaim Consulting Services Limited |
England and Wales |
||||
638 |
Reinmex |
Mexico |
||||
639 |
Reinsurance Solutions International, L.L.C. |
Delaware |
||||
640 |
Reitmulders & Partners B.V. |
Netherlands |
||||
641 |
Resolutions International Limited |
Delaware |
||||
642 |
ReSolutions International Limited |
England and Wales |
||||
643 |
Retach Corporation |
Delaware |
||||
644 |
RIC
Management Services Limited |
Ireland |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
645 |
Richard Sparrow and Company (International Non Marine) Limited (In Liquidation) |
England and Wales |
||||
646 |
Richard Sparrow and Company Limited |
England and Wales |
||||
647 |
Richard Sparrow Holdings Limited (In Liquidation) |
England and Wales |
||||
648 |
Risk
Company A |
Philippines |
||||
649 |
Risk
Company B |
Philippines |
||||
650 |
Rivers Group Limited |
England and Wales |
||||
651 |
RMB-Risk Management Beratungs-GmbH |
Germany |
||||
652 |
Roberts Donegan Limited |
England and Wales |
||||
653 |
Rockefeller Risk Advisors of Florida, Inc. |
Florida |
||||
654 |
Rockefeller Risk Advisors, Inc. |
New
York |
||||
655 |
RSI
Solutions International, Inc. |
New
York |
||||
656 |
RSL
Insurances Pty Ltd. |
Australia |
||||
657 |
SCIB
(Bermuda) Limited |
Bermuda |
||||
658 |
Scientific Testing Laboratories, Inc. |
USA |
||||
659 |
SCMS
Administrative Services, Inc. |
Illinois |
||||
660 |
Seabury & Smith Group Limited (In Liquidation) |
England and Wales |
||||
661 |
Seabury & Smith, Inc. |
Delaware |
||||
662 |
Second Opinion Insurance Services |
California |
||||
663 |
Sedgwick (Bermuda) Limited |
Bermuda |
||||
664 |
Sedgwick (Deutschland) GmbH |
Germany |
||||
665 |
Sedgwick (Holdings) Pty. Limited |
Australia |
||||
666 |
Sedgwick (PNG) Limited |
Papua
New Guinea |
||||
667 |
Sedgwick Africa Holdings (Proprietary) Limited |
South
Africa |
||||
668 |
Sedgwick Alpha Limited (In Liquidation) |
England and Wales |
||||
669 |
Sedgwick Asia Pacific Limited |
Australia |
||||
670 |
Sedgwick Aviation Limited |
England and Wales |
||||
671 |
Sedgwick Benefits, Inc. |
Utah |
||||
672 |
Sedgwick Bergvall Holdings AS |
Norway |
||||
673 |
Sedgwick Brimex (Guernsey) Limited |
Guernsey |
||||
674 |
Sedgwick Claims Management Services Limited |
Ireland |
||||
675 |
Sedgwick Claims Management Services, Inc. |
Illinois |
||||
676 |
Sedgwick CMS Holdings, Inc. |
Delaware |
||||
677 |
Sedgwick Construction Asia Limited |
Hong
Kong |
||||
678 |
Sedgwick Consulting Group Limited |
England and Wales |
||||
679 |
Sedgwick Corporate and Employee Benefits Limited |
Australia |
||||
680 |
Sedgwick Corporate Services Limited |
Isle
of Man |
||||
681 |
Sedgwick Dineen Group Limited |
Ireland |
||||
682 |
Sedgwick Dineen Ireland Limited |
Ireland |
||||
683 |
Sedgwick Dineen Limited |
Ireland |
||||
684 |
Sedgwick Dineen Trustees Limited |
Ireland |
||||
685 |
Sedgwick Dineen Trustees Limited |
Ireland |
||||
686 |
Sedgwick Energy & Marine Limited |
England and Wales |
||||
687 |
Sedgwick Energy (Insurance Services) Inc. |
Texas |
||||
688 |
Sedgwick Energy Limited |
England and Wales |
||||
689 |
Sedgwick Far East Limited |
England and Wales |
||||
690 |
Sedgwick Financial Services Limited |
England and Wales |
||||
691 |
Sedgwick Financial Services, Inc |
Delaware |
||||
692 |
Sedgwick Forbes Middle East Limited |
New Jersey |
||||
693 |
Sedgwick Group (Australia) Pty. Limited |
Australia |
||||
694 |
Sedgwick Group (Bermuda) Limited |
Bermuda |
||||
695 |
Sedgwick Group (Zimbabwe) Limited |
Zimbabwe |
||||
696 |
Sedgwick Group Limited |
England and Wales |
||||
697 |
Sedgwick Holdings (Private) Limited |
Zimbabwe |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
698 |
Sedgwick Hung Kai Insurance & Risk Management Consultants Limited |
Hong
Kong |
||||
699 |
Sedgwick Inc. |
New
York |
||||
700 |
Sedgwick Insurance Agencies Pty Limited |
Australia |
||||
701 |
Sedgwick Internationaal B.V. |
Amsterdam |
||||
702 |
Sedgwick International Broking Services Limited (In Liquidation) |
England and Wales |
||||
703 |
Sedgwick International Marketing Services Inc |
Delaware |
||||
704 |
Sedgwick International Risk Management, Inc. |
Delaware |
||||
705 |
Sedgwick Kassman Limited |
Papua
New Guinea |
||||
706 |
Sedgwick Life and Benefits, Inc. |
Texas |
||||
707 |
Sedgwick Limited |
England and Wales |
||||
708 |
Sedgwick Ltd. |
Australia |
||||
709 |
Sedgwick Management Services (Antigua) Limited |
Antigua |
||||
710 |
Sedgwick Management Services (Bermuda) Limited |
Bermuda |
||||
711 |
Sedgwick Management Services (Ireland) |
Ireland |
||||
712 |
Sedgwick Management Services (Isle of Man) Limited |
Isle
of Man |
||||
713 |
Sedgwick Management Services (London) Limited |
England and Wales |
||||
714 |
Sedgwick Management Services (Private) Limited |
Zimbabwe |
||||
715 |
Sedgwick Management Services (Singapore) Pte Limited |
Singapore |
||||
716 |
Sedgwick Management Services (U.S.) Ltd. |
Vermont |
||||
717 |
Sedgwick Managing General Agency, Inc. |
Texas |
||||
718 |
Sedgwick Noble Lowndes (NZ) Ltd. |
New
Zealand |
||||
719 |
Sedgwick Noble Lowndes (UK) Limited |
England and Wales |
||||
720 |
Sedgwick Noble Lowndes Actuarial Limited |
Australia |
||||
721 |
Sedgwick Noble Lowndes Asia Pacific Limited |
Australia |
||||
722 |
Sedgwick Noble Lowndes Financial Planning Limited |
Australia |
||||
723 |
Sedgwick Noble Lowndes Group Limited |
England and Wales |
||||
724 |
Sedgwick Noble Lowndes Limited |
Ireland |
||||
725 |
Sedgwick Noble Lowndes Limited |
England and Wales |
||||
726 |
Sedgwick Noble Lowndes Limited |
Hong
Kong |
||||
727 |
Sedgwick Noble Lowndes North America, Inc. |
Delaware |
||||
728 |
Sedgwick Noble Lowndes Trusteeship Services Limited |
Australia |
||||
729 |
Sedgwick Overseas Investments Limited |
England and Wales |
||||
730 |
Sedgwick Oy |
Finland |
||||
731 |
Sedgwick Pte Ltd |
Singapore |
||||
732 |
Sedgwick Re Asia Pacific (Consultants) Private Limited |
Singapore |
||||
733 |
Sedgwick Re Asia Pacific Limited |
Australia |
||||
734 |
Sedgwick Risk Management & Consultants (Private) Limited |
Zimbabwe |
||||
735 |
Sedgwick Risk Services AB |
Sweden |
||||
736 |
Sedgwick Superannuation Pty Limited |
Australia |
||||
737 |
Sedgwick Sweden Aktiebolag |
Sweden |
||||
738 |
Sedgwick Trustees Limited |
England and Wales |
||||
739 |
Sedgwick UK Risk Services Limited |
England and Wales |
||||
740 |
Sedgwick Ulster Pension Trustees Limited |
Northern Ireland |
||||
741 |
Settlement Trustees Limited |
England and Wales |
||||
742 |
SIMS
Nominees Limited (In Liquidation) |
England and Wales |
||||
743 |
SNL
Super Pty Ltd. |
Australia |
||||
744 |
Societe Bargheon S.A. |
France |
||||
745 |
Societe Conseil Mercer Limitee |
Canada |
||||
746 |
Southampton Place Trustee Company Limited |
England and Wales |
||||
747 |
Southern Marine & Aviation Underwriters, Inc. |
Louisiana |
||||
748 |
Southern Marine & Aviation, Inc. |
Louisiana |
||||
749 |
Summit Management Company Limited |
England and Wales |
||||
750 |
Sundance B.V. |
Rotterdam |
|
|
Company
Name
|
|
Domicile
| ||
---|---|---|---|---|---|---|
751 |
Syndicate and Corporate Management Services Inc. |
Delaware |
||||
752 |
Syndicate and Corporate Management Services Limited |
Bermuda |
||||
753 |
Technical Insurance Management Services Pty Limited |
Australia |
||||
754 |
TH
Lee Putnam Equity Managers Trust |
Massachusetts |
||||
755 |
TH
Lee, Putnam Capital Management, LLC |
Delaware |
||||
756 |
The
Carpenter Management Corporation |
Delaware |
||||
757 |
The
Marsh Centre Limited (In Liquidation) |
England and Wales |
||||
758 |
The
Medisure Group Limited |
England and Wales |
||||
759 |
The
Schinnerer Group, Inc. |
Delaware |
||||
760 |
Tobelan S.A. |
Uruguay |
||||
761 |
Tower Hill Limited |
England and Wales |
||||
762 |
Tower Place Developments (West) Limited |
England and Wales |
||||
763 |
Tower Place Developments Limited |
England and Wales |
||||
764 |
Transbrasil Ltda. |
Brazil |
||||
765 |
Transglobe Management (Bermuda) Ltd. |
Bermuda |
||||
766 |
Triad Services, Inc. |
Delaware |
||||
767 |
Triad Underwriting Management Agency, Inc. |
Delaware |
||||
768 |
U.S.
Holding, Inc. |
Delaware |
||||
769 |
UABDB Marsh Lietuva |
Lithuania |
||||
770 |
UBM
Consulting France International Management Consultants |
France |
||||
771 |
Ulster Insurance Services Limited |
Northern Ireland |
||||
772 |
Undustrial Superannuation Administration Services Ltd. |
Australia |
||||
773 |
Uniservice Insurance Service Limited |
Bermuda |
||||
774 |
Unison Financial Services (IOM) Limited |
Isle
of Man |
||||
775 |
Unison Management (Bermuda) Limited |
Bermuda |
||||
776 |
Unison Management (Dublin) Limited |
Ireland |
||||
777 |
Unison Management (Finland) Oy |
Finland |
||||
778 |
Unison Management (IOM) Limited |
Isle
of Man |
||||
779 |
Universal Ray S.A. |
Uruguay |
||||
780 |
Unused Subsidiary, Inc. |
New
York |
||||
781 |
Unused Subsidiary, Inc. |
Texas |
||||
782 |
Van
Vugt & Beukers B.V. |
Netherlands |
||||
783 |
Victor O. Schinnerer & Company Limited |
England and Wales |
||||
784 |
Victor O. Schinnerer & Company, Inc. |
Delaware |
||||
785 |
Victor O. Schinnerer of Illinois, Inc. |
Illinois |
||||
786 |
Wigham Poland Australia Pty. Limited |
Australia |
||||
787 |
Wigham Poland Aviation Limited (In Liquidation) |
England and Wales |
||||
788 |
Wigham Poland Limited |
England and Wales |
||||
789 |
Willcox, Barringer & Co. (California) Inc. |
California |
||||
790 |
William M. Mercer (Aust) Limited |
Australia |
||||
791 |
William M. Mercer Cullen Egan Dell Limited |
Australia |
||||
792 |
William M. Mercer Europe |
France |
||||
793 |
William M. Mercer Fraser (Irish Pensioneer Trustees) Limited |
Ireland |
||||
794 |
William M. Mercer Limited (NZ) |
New
Zealand |
||||
795 |
William M. Mercer Philippines, Incorporated |
Philippines |
||||
796 |
William M. Mercer Ten Pas B.V. |
Netherlands |
||||
797 |
Winchester Bowring Limited |
England and Wales |
||||
798 |
WMM
Haneveld Investment Consulting B.V.N |
Netherlands |
||||
799 |
WMM
Services, Inc. |
Delaware |
||||
800 |
Zolfo Cooper Advisors, Inc. |
New
Jersey |
||||
801 |
Zolfo Cooper Capital LLC |
New
Jersey |
||||
802 |
Zolfo Cooper Holdings, Inc. |
New
Jersey |
||||
803 |
Zolfo Cooper Management Advisors, Inc. |
New
Jersey |
||||
804 |
Zolfo Cooper Services, Inc. |
New
Jersey |
1. |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Marsh & McLennan Companies, Inc. |
Date: March 1,
2006 |
/s/ Michael G.
Cherkasky Michael G. Cherkasky President and Chief Executive Officer |
|||||
Date: March 1,
2006 |
/s/ Sandra S.
Wijnberg Sandra S. Wijnberg Senior Vice President and Chief Financial Officer |