Exhibit
10.4
EMPLOYMENT
AGREEMENT
This
Employment Agreement (the “ Agreement ”) is
made and entered into effective as of December 10, 2007 (the
“ Effective Date ”), by and between
Marsh & McLennan Companies, Inc. (together with its
successors and assigns, “ MMC ”, or the
“Company”) and Daniel S. Glaser (the “
Executive ”).
WHEREAS, the
Executive and the Company desire to embody in this Agreement the
terms and conditions of the Executive’s employment by the
Company;
NOW,
THEREFORE , in
consideration of the premises and mutual promises contained in this
Agreement, including the compensation paid to the Executive, the
parties hereby agree:
ARTICLE 1
Employment,
Duties and Responsibilities
1.1
Employment; Reporting . The Company shall cause Marsh, Inc.
(“Marsh”) to employ the Executive as its Chairman and
Chief Executive Officer. The Executive hereby accepts such
employment, subject to the terms and conditions of this Agreement.
The Executive shall report directly to the Chief Executive Officer
of MMC (the “Chief Executive Officer”).
1.2 Duties
and Responsibilities .
The Executive
shall have such duties and responsibilities and power and authority
as those normally associated with the position of Chairman and
Chief Executive Officer, Marsh, as well as any additional duties,
responsibilities and/or powers and authority assigned to him by the
Chief Executive Officer which are consistent with his position as
Chairman and Chief Executive Officer, Marsh.
The Executive
agrees to use his best efforts to promote the interests of the
Company and Marsh, and agrees that he will devote his entire
working time, care and attention to his duties, responsibilities
and obligations to the Company and Marsh 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 Chief Executive Officer and manage his
personal investments and affairs, so long as such activities do
not, either individually or in the aggregate, interfere with the
Executive’s duties and responsibilities as Chairman and Chief
Executive Officer, Marsh.
ARTICLE 2
Term
2.1
Employment Period . The initial term of the
Executive’s employment under this Agreement (the “
Initial Term ”) shall commence on the Effective
Date and shall continue until the third anniversary of the
Effective Date. Thereafter, this Agreement shall automatically
renew for successive one (1) year terms (each, a “
Renewal Term ”) unless either party sends a
notice of termination to the other party in accordance with
Section 6.2 hereof at least ninety (90) days prior to the
expiration of the Initial Term or Renewal Term, as the case may be.
The Initial Term, together with any and all Renewal Terms, if any,
are the “ Term .” After the expiration of the
Term for any reason the Executive will become an
“at-will” employee of the Company.
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 (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 $1.0 million. 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 Executive’s Base Salary is increased, the
increased amount shall thereafter be the Base Salary. The Base
Salary shall be payable in installments, consistent with the
Company’s payroll procedures in effect from time to
time.
3.2 Annual
Bonus . In addition to Base Salary, commencing with the 2008
performance year, the Executive shall be eligible to participate
throughout the Term in such annual bonus plans and programs as may
be in effect from time to time in accordance with the
Company’s compensation practices and the terms and provisions
of any such plans or programs. The Executive’s annual target
bonus opportunity will range between one hundred fifty percent
(150%) and three hundred percent (300%) of his Base
Salary. The actual bonus amounts will be determined by the
Committee based on the achievement of entity and individual
performance goals to be agreed upon, provided, however, that the
Executive’s bonus for the 2008 performance year shall be no
less than $2,250,000 (the “ 2008 Minimum Bonus
”). The annual bonus shall be paid in the same time and
manner as corresponding awards to other senior executives of the
Company generally. Notwithstanding the foregoing, in no event shall
the annual bonus be paid later than March 15 of the year
following the year with respect to which such bonus is
payable.
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3.3
Long-Term and Equity Compensation . The Executive shall also
be eligible to participate in MMC’s long-term incentive
compensation plans (including its equity-compensation plans) as
determined by the Committee. The specific awards under these plans
will be made by the Committee in its sole discretion, commensurate
with the Executive’s position as Chairman and Chief Executive
Officer, Marsh. Notwithstanding the foregoing, beginning in 2009,
the Committee shall each year grant to the Executive, no later than
it makes corresponding awards to other senior executives of the
Company generally, and on terms and conditions that are both
consistent with this Agreement and no less favorable to the
Executive than the terms and conditions that apply to corresponding
awards to other similarly situated participants generally,
long-term incentive compensation with a combined grant-date target
value between one hundred fifty percent (150%) and three
hundred fifty percent (350%) of the Executive’s Base
Salary. The combined grant-date target value for the
Executive’s long-term incentive compensation to be granted in
2009, the composition of which shall be determined by the
Committee, shall be no less than $3 million.
3.4 Make-up
Award .
(a) The
Executive will be entitled to a cash make-up award of $5,230,000,
reflecting the value of equity-based and cash-based compensation
forgone as a result of the Executive’s resignation from his
former employer. This cash award shall vest and be paid to the
Executive as follows: one-half of the award on the Effective Date
and one-half of the award upon the first anniversary of the
Effective Date.
(b) The
Executive has provided the Company with documentation in respect of
the forfeiture of compensation from his former employer. The
Executive agrees to provide the Company with a copy of any written
termination agreement between the Executive and his former
employer. The Executive agrees to use reasonable efforts,
consistent with his employment with the Company, to cause his
former employer to pay or distribute compensation from his former
employer subject to the make-up award under Section 3.4(a).
The Executive will immediately notify the Company of any such
payment or distribution, and the amount of the make-up award under
Section 3.4(a) shall be reduced if and to the extent that the
Executive receives any such payment or distribution.
3.5 Initial
Retention Awards . As of the Effective Date, the Executive will
be granted the following initial retention awards:
(a) Restricted
stock units with a grant-date fair market value of $3 million. The
award will be converted from the dollar value of the grant into
restricted stock units based upon the average of the high and low
prices of MMC stock on the New York Stock Exchange one trading day
prior to the Effective Date. The units will be subject to
three-year cliff vesting (measured from the date of grant) and will
be subject to standard terms and conditions approved by the
Committee as set forth in the award agreement. Dividend equivalent
payments will be made on the unvested units.
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(b)
Stock options in respect of 100,000 shares of the Company’s
common stock. The stock options shall have an exercise price on the
grant date that is equal to the average of the high and low prices
of MMC stock on the New York Stock Exchange one trading day prior
to the date of grant, but such stock options may not be exercised
until they are vested and the price of the Company’s common
stock exceeds such exercise price by at least fifteen percent
(15%) for a period of at least ten (10) consecutive
trading days. One-fourth of the stock option award will vest on
each of the first, second, third and fourth anniversaries of the
grant date. The stock options will otherwise be subject to standard
terms and conditions approved by the Committee as set forth in the
award agreement.
(c) A cash
award of $1.5 million. This cash award shall vest and be paid to
the Executive as follows: one-half of the award on the Effective
Date and one-half of the award upon the first anniversary of the
Effective Date.
3.6
Relocation Transition Benefits . For a period commencing
with the Effective Date and ending on July 31, 2008 (the
“ Relocation Transition Period ”), the Company
shall reimburse the Executive up to $8,000 per month (plus
reasonable brokerage expenses incurred to secure such housing) for
the Executive’s temporary housing expenses in the New York
City metropolitan area and up to $36,000 for airfare and related
ground transfers for personal travel by the Executive and his
immediate family members between London, England and the New York
area. In addition, during the Relocation Transition Period, the
Company will provide certain expatriate benefits similar to those
that were provided by the Executive’s former employer while
the Executive’s family remains in London. The additional
benefits provided by the Company pursuant to the preceding sentence
shall be subject to tax equalization if and to the extent that such
benefits would have been subject to tax equalization from the
Executive’s former employer. At the conclusion of the
Relocation Transition Period, the Executive will be entitled to
relocation assistance pursuant to the Company’s Relocation
Policy limited to home sale assistance, home purchase assistance,
shipment of household goods and transportation of family
members.
3.7 Benefit
Plans . The Executive and the Executive’s 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
Company’s ability to change, modify, cancel or amend any such
plans.
3.8
Executive Financial Services Program . The Executive shall
be eligible to participate in the MMC Financial Services Program as
in effect from time to time. In addition, for purposes of this
Program, the Executive will be treated as a returning expatriate,
entitled to tax consulting services from the Company’s
expatriate tax service provider relating to international aspects
of the Executive’s tax situation.
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3.9
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 in effect from time to time during the
Term. A copy of the policy has been made available to the
Executive.
3.10
Vacation . The Executive shall be entitled to paid vacation
in accordance with the Company’s policy in effect from time
to time during the Term.
3.11 Legal
Fees . The Company shall reimburse the Executive for reasonable
legal fees actually incurred in connection with the negotiation and
drafting of this Agreement up to a maximum of $10,000; provided
that the Executive provides the Company with appropriate written
documentation with respect to such legal fees within six weeks
after this Agreement has been executed.
3.12
Indemnification . The Executive shall be entitled to
indemnification in accordance with the Company’s by-laws as
in effect on the date hereof, subject to applicable law. Any
expenses (including damages, losses, judgments, fines, penalties,
settlements, costs, attorneys’ fees, and expenses of
establishing a right to indemnification), that are subject to such
indemnification and are or may be incurred in connection with a
proceeding shall be paid by the Company in advance within 30 days
of a request by the Executive, which shall be accompanied by
documentation substantiating such expenses. Executive shall
promptly deliver to the Company an undertaking, in such form as the
Company shall specify, to reimburse the Company for expenses to
which Executive is adjudged not to be entitled to
indemnification.
ARTICLE 4
Noncompetition/Nonsolicitation/Confidentiality
4.1
Noncompetition and Nonsolicitation Periods
(a) During the
Executive’s employment with the Company or any subsidiary and
during the 24 month period following termination of the
Executive’s employment with the Company or any subsidiary for
any reason, the Executive shall not, directly or
indirectly:
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(i)
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engage in any
Competitive Activity or
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(ii)
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whether on
behalf of himself or any other person or entity (x) solicit
any customer or client of the Company or any subsidiary with
respect to a Competitive Activity or (y) solicit or employ any
employee of the Company or any subsidiary for the purpose of
causing such employee to terminate his or her employment with the
Company or such subsidiary.
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For purposes
of this Agreement, “Competitive Activity” shall mean
the Executive’s 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 subsidiary conducted by the Company
or such subsidiary as of the date of the termination of the
Executive’s employment; provided, however, that the Executive
may be employed by or otherwise associated with:
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(i)
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a business of
which a subsidiary, division, segment, unit, etc. is in competition
with the Company or any subsidiary but as to which such subsidiary,
division, segment, unit, etc., the Executive has absolutely no
direct or indirect responsibilities or involvement, or
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(ii)
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a company where
the Competitive Activity is:
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(x)
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from the
perspective of such company, de minimis with respect to the
business of such company and its affiliates, and
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(y)
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from the
perspective of the Company or any subsidiary, not in material
competition with the Company or any subsidiary.
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(iii)
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it is
specifically agreed and understood that the Executive’s
acceptance of employment with an insurance carrier following
termination of Executive’s employment with the Company is not
a “Competitive Activity.”
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(b) At all
times prior to and following the Executive’s 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 subsidiary, including such trade secret or
proprietary or confidential information of any customer or client
or other entity to which the Company or any subsidiary owes an
obligation not to disclose such information, which the Executive
acquires during the Executive’s employment with the Company
or any subsidiary, including but not limited to records kept in the
ordinary course of business except:
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(i)
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As such
disclosure or use may be required or appropriate in connection with
the Executive’s work as an employee of the Company or any
subsidiary;
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(ii)
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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
subsidiary 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;
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(iii)
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As to such
confidential information that becomes generally known to the public
or trade without the Executive’s violation of this
Section 4.1(b); or
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(iv)
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To the
Executive’s spouse and/or the Executive’s personal tax
and financial advisors as reasonably necessary or appropriate to
advance the Executive’s tax, financial and other personal
planning (each an “Exempt Person”), provided,
however , that any improper disclosure or use of any trade
secret or proprietary or confidential information of the Company or
any subsidiary by an Exempt Person shall be deemed to be a breach
of this Section 4.1(b) by the Executive.
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(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 subsidiaries. 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 . The Company shall have the
right, subject to the terms of this Agreement, to terminate the
Executive’s employment at any time, with or without
“Cause.” The Company 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
Chief Executive Officer or the Board which are consistent with the
scope and nature of the Executive’s duties and
responsibilities as set forth herein;
(b) the
Executive’s conviction of, or plea of guilty or nolo
contendere to, a felony or any misdemeanor involving moral
turpitude, fraud or embezzlement;
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(c)
any gross negligence or willful misconduct of the Executive
resulting in a material loss to the Company or any of its
subsidiaries, or material damage to the reputation of the Company
or any of its subsidiaries;
(d) any
material breach by the Executive of any one or more of the
covenants referred to in Article 4 hereof; or
(e) any
violation of any statutory or common law duty of loyalty to the
Company or any of its subsidiaries.
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”.
For purposes of this Agreement, “Good Reason,” shall
mean the occurrence of any of the following during the Term,
without the Executive’s prior written consent (provided that
an isolated, insubstantial or inadvertent action not taken in bad
faith which is remedied by the Company promptly after receipt of
notice thereof given by the Executive shall not constitute Good
Reason): (A) a material diminution in the Executive’s
position (including status, offices, titles, and reporting
requirements), authority, duties or responsibilities as
contemplated by this Agreement; (B) any removal of the
Executive from his position as Chairman and Chief Executive
Officer, Marsh; (C) any failure by the Company to comply with
the provisions of Article 3 hereof; (D)&nbs
