8-KLeadership ChangesExhibits & Filings

MARSH & MCLENNAN COMPANIES, INC. 8-K Report, Executive Changes (Feb 22, 2008)

Filed February 22, 2008For Securities:MRSHMMC

Summary

Marsh & McLennan Companies, Inc. (MMC) filed an 8-K on February 22, 2008, to report on the separation of its former president and chief executive officer, Michael G. Cherkasky. The filing details the terms of the Separation and Release Agreement entered into on February 15, 2008, following Mr. Cherkasky's termination effective January 29, 2008. Key aspects for investors include the financial terms of the separation, which stipulate a lump-sum payment of $7,150,000 to Mr. Cherkasky. This payment is calculated as two times his combined base salary and average bonus for 2005-2006, as per his employment agreement, because his termination was not for cause. Additionally, all of Mr. Cherkasky's unvested equity awards, including restricted stock units and stock options, fully vested upon his separation. The filing also outlines certain ongoing benefits and a consulting arrangement for a transition period.

Key Highlights

  • 1Michael G. Cherkasky, former President and CEO, separated from MMC on January 29, 2008.
  • 2MMC entered into a Separation and Release Agreement with Mr. Cherkasky on February 15, 2008.
  • 3Mr. Cherkasky will receive a lump-sum payment of $7,150,000, calculated as twice his base salary plus his average bonus for 2005-2006.
  • 4No bonus was awarded to Mr. Cherkasky for fiscal year 2007.
  • 5All of Mr. Cherkasky's unvested equity awards, including restricted stock units and stock options, vested fully upon his separation date.
  • 6A portion of Mr. Cherkasky's stock options are subject to stock price performance contingencies for exercisability.
  • 7MMC will provide Mr. Cherkasky with one year of administrative support, executive outplacement services, and continued participation in certain benefit programs.

Frequently Asked Questions

The direct separation payment is $7,150,000. This does not include the value of fully vested equity awards, the cost of administrative support, outplacement services, or benefits continuation, nor the consulting fees paid for transition services.

Upon separation, Mr. Cherkasky received full vesting of all his equity awards. This includes 293,409 restricted stock units, 128,469 shares of restricted stock, and 820,967 stock options. Some of these stock options have specific stock price performance conditions to become exercisable.

Yes, Mr. Cherkasky will serve as a consultant to MMC through March 31, 2008, to assist with the transition process and other requested projects. He will receive a monthly fee of $333,333 for these consulting services, subject to adjustments based on salary already received.

The 8-K filing indicates that Mr. Cherkasky's employment was terminated and he entered into a Separation and Release Agreement. The agreement specifies that MMC did not terminate his employment for 'cause' as defined in his employment agreement, which impacts the calculation of his separation payment.