What is the purpose of the new 'Clawback' policy?

The 'Clawback' policy allows Marsh & McLennan Companies (MMC) to cancel or seek reimbursement of incentive compensation from officers if they engaged in intentional misconduct that contributed to a financial restatement, and their compensation would have been lower based on the restated financials. This aims to align executive accountability with financial reporting integrity.

When does the 'Clawback' policy take effect and what is the recovery limit?

The policy applies to incentive compensation received by officers after July 19, 2007. MMC will not seek to recover incentive compensation paid more than three years prior to the date the applicable restatement is disclosed.

How has the vesting of equity awards changed upon a Change in Control (CIC)?

For equity-based awards granted after March 15, 2007, a Change in Control (CIC) alone will no longer automatically trigger full vesting. Instead, a 'double-trigger' is now required: the CIC must occur, and the employee must then be terminated without cause or resign for good reason within 24 months following the CIC for the awards to vest.

Are there any immediate implications for current executive compensation based on these new policies?

According to the filing, Marsh & McLennan Companies is not currently aware of any facts suggesting that the 'Clawback' policy requires the cancellation or reimbursement of incentive compensation paid to any officer to date. The new policies primarily affect future compensation decisions and award structures.

MRSH/MMC 8-K SEC Disclosure

Summary

Marsh & McLennan Companies, Inc. (MMC) has announced the adoption of two significant policies affecting executive compensation, stemming from its ongoing review of corporate governance practices. The first policy introduces a "Clawback" provision, allowing MMC to cancel or seek reimbursement of incentive compensation from officers if the compensation was based on financial results that are subsequently restated due to intentional misconduct by the officer, and the officer would have received less compensation had the financials been accurate. This policy applies to incentive compensation granted after July 19, 2007, with recovery limited to amounts paid within three years prior to the restatement date. The second policy revises the conditions for vesting of equity-based awards upon a change in control (CIC). Previously, a CIC would automatically trigger full vesting. The new "double-trigger" provision means that equity awards granted after March 15, 2007, will only vest upon a CIC if the employee is subsequently terminated without cause or resigns for good reason within 24 months of the CIC. These changes reflect MMC's commitment to strengthening governance and aligning executive pay with company performance and shareholder interests.

Key Highlights

1MMC adopted a "Clawback" policy to recover incentive compensation from officers in cases of intentional misconduct leading to financial restatements.
2The clawback policy applies to incentive compensation granted after July 19, 2007.
3MMC can recover incentive compensation paid up to three years prior to a restatement, if misconduct is proven.
4A new "double-trigger" provision for equity awards upon a Change in Control (CIC) has been implemented for awards granted after March 15, 2007.
5Under the double-trigger policy, equity awards will only vest if a CIC occurs AND the employee is terminated without cause or resigns for good reason within 24 months post-CIC.
6These policies are part of MMC's ongoing efforts to enhance corporate governance.
7MMC is not currently aware of any compensation that would need to be clawed back under the new policy.

MARSH & MCLENNAN COMPANIES, INC. 8-K Report, Corporate Update (Oct 16, 2007)

Summary

Key Highlights

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