Exhibit 10.4
EMPLOYMENT
AGREEMENT
(Amended and restated effective
as of September 9, 2005)
This Employment Agreement (the
“Agreement”) was made and entered into as of the 25th
day of August, 2005 (the “ Effective Date ”), by
and between Marsh & McLennan Companies, Inc. (“
MMC ” or the “ Company ”), a
Delaware corporation, and Brian M. Storms (the “
Executive ”) and amended and restated effective as of
the 9 th day of September, 2005.
WHEREAS , the Executive and the Company originally
entered into the Agreement as of August 25, 2005 to embody in the
Agreement the terms and conditions of the Executive’s
continued employment by the Company or a subsidiary; and
WHEREAS , the Agreement referred to the
Executive’s prior position as President and Chief Executive
Officer, Mercer Human Resource Consulting; and
WHEREAS , on September 9, 2005 the Executive was elected
as Chairman and Chief Executive Officer of Marsh, Inc.
(“Marsh” ); and
WHEREAS , the Executive and the Company desire to amend
the Agreement to reflect the Executive’s positions at Marsh
but to leave the Agreement substantially unchanged in all other
respects;
NOW, THEREFORE
, in consideration of the premises
and mutual promises contained in this Agreement and the amendment
thereto, 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 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 the Company (the
“Chief Executive Officer”).
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1.2
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Duties and
Responsibilities .
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(a) The
Executive shall have such duties and responsibilities and power and
authority as those normally associated with the position of
Chairman and Chief Executive fficer, 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.
(b) 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 so long as
such activity does not 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 through August 25, 2008. 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
.”
2.2
Payment Due to Non-Renewal by the Company . If, prior to the
Executive’s sixty-second (62nd) birthday, the Company
sends a notice of termination of the Term to the Executive as
provided in Section 2.1 hereof, and after the expiration of
the Term the Executive’s employment is terminated (A) by
the Company without Cause (as defined in Section 5.1
hereof) or due to death or Disability (as defined in
Section 5.4 hereof) or (B) by the Executive for any
reason, then the Company shall pay to the Executive, in a lump sum
within thirty (30) days of the effective date of such
termination of employment, a cash amount equal to the sum of
(x) the Executive’s then-current Base Salary (as defined
in Section 3.1 hereof) and (y) the average annual
bonus (as described in Section 3.2 hereof) actually paid
to the Executive during the three (3) years immediately prior
to the termination. In addition, if at any time the Company sends a
notice of termination of the Term to the Executive as provided in
Section 2.1 hereof, and after the expiration of the Term the
Executive’s employment is terminated (A) by the Company
without Cause (as defined in Section 5.1 hereof) or due
to death or Disability (as defined in Section 5.4
hereof) or (B) by the Executive for any reason, then
(a) the Company shall also pay to the Executive the Accrued
Obligations (as defined in
Section 5.5(a) hereof) within thirty (30) days
of the effective date of such termination and (b) all unvested
equity awards (which as used in this Agreement include stock
options) 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. For the avoidance of doubt, and notwithstanding
anything contained herein to the contrary, the giving of such
notice of termination of the Term by the Company shall not
constitute a “Good Reason” (as defined in
Section 5.2 hereof), and a payment made by the Company to the
Executive under this Article 2
shall preclude the Executive from
thereafter receiving any payment provided for (i) in
Article 5 hereof or (ii) under any separation or
severance plan, program, agreement or other arrangement in which
the Executive is a participant or a party.
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 $1.0 million.
The Base Salary shall be reviewed at least annually by the Board of
Directors of the Company (the “Board”) and may be
increased (but not decreased) in the sole discretion of the
Board. 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. At
the end of the first payroll period that commences after the
Effective Date, the Executive shall also receive a lump-sum payment
(subject to appropriate deductions) equal to the difference
between the Base Salary and the Executive’s base salary in
effect immediately prior to the Effective Date prorated for the
period from January 1, 2005 to the Effective Date.
3.2
Annual Bonus . In addition to Base Salary, the Executive
shall be eligible to participate throughout the Term in such annual
bonus plans and programs (“ Annual Bonus 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 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, with bonuses in the upper portion of the annual
bonus opportunity range being earned only for superior achievement
of such performance goals. Based on 2005 performance up to the
Effective Date, the Company expects the Executive’s bonus for
2005 to be in the upper portion of the annual bonus opportunity
range. The annual bonus shall be paid entirely in cash.
3.3
Long-Term and Equity Compensation . The Executive shall also
be eligible to participate in the Company’s long-term
incentive compensation plans (including its equity-compensation
plans) applicable to MMC’s senior executive officers.
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, the Committee shall each year grant
to the Executive long-term incentive compensation comprised of
(i) a restricted stock or restricted stock unit award and/or
(ii) a stock option or stock-settled stock appreciation right,
with a combined grant-date target value between
one-time and three-times the
Executive’s Base Salary, as determined by the Committee, and
provided further that neither the restricted stock nor the stock
option portion of the award shall comprise more than two-thirds of
the total grant-date target value of the award. Each restricted
stock award will vest three years from the grant date, while
one-third of each stock option award will vest on each of the
first, second and third anniversaries of the grant date.
3.4
Initial Retention Award . The Executive acknowledges that he
has received an initial retention award under the 2000 Senior
Executive Incentive and Stock Award Plan (the “ Initial
Retention Award ”) of restricted stock with a
grant-date value of $1.6 million. The restricted stock award will
vest three years from the grant date. Additional terms and
conditions of the award shall be determined by the Committee and
contained in the grant agreements, provided that no such term or
condition shall be inconsistent with any provision of this
Agreement.
3.5
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 pension, 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. The Executive shall be eligible to participate in the
Company’s retiree medical program as may be in effect from
time to time.
3.6
Executive Financial Services Program . The Executive shall
be eligible to participate in the MMC Financial Services Program as
in effect from time to 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 the Company’s written policies relating
to business-related expenses as in effect, from time to time,
during the Term, a copy of which has previously been provided to
the Executive.
3.8
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.
3.9
Indemnification . The Executive shall be entitled to
indemnification in accordance with the Company’s by-laws as
in effect from time to time.
ARTICLE 4
Noncompetition/Nonsolicitation/Confidentiality
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4.1
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Noncompetition and
Nonsolicitation Periods
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(a) During
the Executive’s employment with the Company or any subsidiary
and during the applicable noncompetition/nonsolicitation period
following termination of the
Executive’s employment with
the Company or any subsidiary for any reason (other than a
termination of employment by the Company due to Disability (as
defined in Section 5.4 hereof) or a non-renewal of the
Term by the Company on or after the Executive’s sixty-second
(62nd) birthday), 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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The noncompetition/nonsolicitation
period shall be (x) 12 months from the date of termination if
termination occurs after the expiration of the Term due to a
non-renewal of the Term by the Company and the Executive has
received the related non-renewal payment provided for in
Section 2.2 hereof or (y) otherwise shall be 24 months
from the date of termination. If the termination of the
Executive’s employment is in connection with a Change in
Control as provided in Section 5.6 hereof, then the
noncompetition/nonsolicitation period shall be 24 months from the
date of termination.
(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 personal tax and financial advisors as reasonably
necessary or appropriate to advance the Executive’s tax,
financial and other personal planning (each and “Exempt
Person”), provided, however , that any 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 Company’s confidential information
and goodwill. 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
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 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 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 sha
