Exhibit 10.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MARSH & McLENNAN COMPANIES, INC.

 

DIRECTORS’ STOCK COMPENSATION PLAN

 

May 15, 2003 Restatement

 

MARSH & McLENNAN COMPANIES, INC.

 

DIRECTORS’ STOCK COMPENSATION PLAN

 

May 15, 2003 Restatement

 

 

 

1.

Purpose.

 

The Marsh & McLennan Companies, Inc. Directors’ Stock Compensation Plan is
intended to provide an incentive to members of the Board of Directors of Marsh &
McLennan Companies, Inc. who receive fees for their services, to remain in the
service of the Company and to encourage such Directors to acquire additional
stock ownership interests in the Company.

 

 

2.

Definitions.

 

 

(a)

“Accounting Date” means June 1st of each Plan Year.

 

(b)          “Annual Share Fee” shall mean, the number of shares of Common Stock
payable to each Director pursuant to Section 5(b) hereof, as shall be determined
by the Committee in its discretion.

 

(c)          “Basic Fee” means the annual retainer specified in a dollar amount
payable to a Director during each Plan Year (at the rate in effect on the
Accounting Date of such Plan Year) for such Director’s services on the Board
(exclusive of the Annual Share Fee and of any amounts payable with respect to
service on a committee of the Board or other committee of Directors or for
attendance at Board or committee meetings).

 

 

(d)

“Board” means the Board of Directors of the Company.

 

(e)          “Committee” means the Directors and Governance Committee of the
Board.

 

(f)           “Common Stock” means the common stock, par value $1.00 per share,
of the Company.

 

(g)          “Company” means Marsh & McLennan Companies, Inc., a Delaware
corporation.

 

(h)          “Deferral Election” has the meaning set forth in Section 5(d)
hereof.

 

 

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(i)           “Deferred Shares” has the meaning set forth in Section 5(d) and
5(e) hereof. In addition, “Deferred Shares” include converted phantom stock
units held as of June 1, 1995 by Directors pursuant to a deferral agreement or
arrangement between the Company and the Director.

 

 

(j)

“Dividend Equivalents” has the meaning set forth in Section 5(e).

 

(k)          “Director” means a member of the Board who receives fees for his or
her services.

 

(l)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(m)        “Fair Market Value” on any given date means, except as otherwise
provided in Section 5(g) hereof, the average of the high and low prices of the
Common Stock on the New York Stock Exchange on the last trading day preceding
such date.

 

(n)          “Maximum Cash Compensation” means the aggregate amount payable to a
Director for such Director’s services on the Board (including any amounts
payable with respect to service on a committee of the Board or other committee
of Directors or for attendance at Board or committee meetings, but excluding (i)
the Annual Share Fee and (ii) the portion of the Basic Fee with respect to which
shares of Common Stock are issuable pursuant to Section 5(a) hereof).

 

(o)          “Plan” means the Marsh & McLennan Companies, Inc. Directors’ Stock
Compensation Plan, as in effect from time to time.

 

(p)          “Plan Year” means the twelve-month period commencing June 1st and
ending on the following May 31st.

 

 

3.

Administration of the Plan.

 

The Plan shall be administered by the Committee. The Committee shall adopt such
rules as it may deem appropriate in order to carry out the purpose of the Plan.
All questions of interpretation, administration, and application of the Plan
shall be determined by a majority of the members of the Committee, except that
the Committee may authorize any one or more of its members, or any officer of
the Company, to execute and deliver documents on behalf of the Committee. The
determination of such majority shall be final and binding in all matters
relating to the Plan. No member of the Committee shall be liable for any act
done or omitted to be done by such member or by any other member of the
Committee in connection with the Plan, except for such member’s own willful
misconduct or as expressly provided by statute.

 

 

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4.

Common Stock Reserved for the Plan.

 

The number of shares of Common Stock authorized for issuance under the Plan, as
adjusted pursuant to Section 6 hereof for events prior to the date of this May
15, 2003 restatement, is 1,500,000, including Deferred Shares, whether
anticipated to be distributed as shares or paid in cash, subject to further
adjustment pursuant to Section 6 hereof for events subsequent to May 15, 2003.
Shares of Common Stock delivered hereunder may be either authorized but unissued
shares or previously issued shares reacquired and held by the Company.

 

 

5.

Terms and Conditions of Grants.

 

(a)           Mandatory Portion of Basic Fee. On each Accounting Date each
Director shall automatically receive a number of shares of Common Stock with a
Fair Market Value on such Accounting Date equal to one-quarter (1/4) of his or
her Basic Fee payable during the Plan Year which commences on such Accounting
Date. Such shares of Common Stock (including fractional shares) shall be
received in lieu of the payment of cash in respect of one-quarter (1/4) of such
Basic Fee and shall be transferred on such Accounting Date in accordance with
Section 5(f) hereof, except to the extent that a Deferral Election shall be in
effect with respect to such shares or to the extent that Section 5(g) hereof
applies.

 

(b)          Annual Share Fee. On each Accounting Date, each Director shall
automatically receive an Annual Share Fee as additional annual compensation for
such Director’s services on the Board.

 

(c)           Elective Portion of Maximum Cash Compensation. Each Director may
elect that a designated percentage (in increments of 10%) of his or her future
Maximum Cash Compensation be paid in shares of Common Stock. Such shares of
Common Stock (including fractional shares) shall be received in lieu of the
payment of cash in respect of the designated percentage of future Maximum Cash
Compensation payable for services rendered in the quarters ended August 15th,
November 15th, February 15th and May 15th, as the case may be. Such shares of
Common Stock shall be transferred in accordance with Section 5(f) hereof, except
to the extent that a Deferral Election shall be in effect with respect to such
shares or to the extent that Section 5(g) hereof applies. An election hereunder
shall be in the form of a document executed and filed with the Secretary of the
Company and shall remain in effect until the effectiveness of any modification
or revocation.

 

(d)          Deferral Election. With respect to (i) the portion of the Basic Fee
payable in Common Stock under Section 5(a) hereof, (ii) the Annual Share Fee
payable in Common Stock under Section 5(b) hereof and (iii) the designated
percentage of Maximum Cash Compensation payable in Common Stock under Section
5(c) hereof, each Director may elect to defer the receipt (a “Deferral
Election”) of all or any portion of the shares of Common Stock otherwise
transferable pursuant to Section 5(f) hereof. In

 

 

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such event, there shall be credited to an account maintained on behalf of such
Director, as of the date on which shares would otherwise be transferred
hereunder, a number of Shares (“Deferred Shares”) equal to the number of shares
otherwise transferable.

 

A Deferral Election or revocation hereunder shall be in the form of a document
executed by the Director and filed with the Secretary of the Company prior to
the time that the fees or compensation to which such election relates has been
earned. Any such election may be modified or revoked at any time with respect to
fees or compensation not yet earned, but will remain in effect until so modified
or revoked. With respect to director fees or compensation already earned,
deferral elections may be modified within the sole discretion of the Committee
subject to such conditions and restrictions as the Committee determines are
necessary or appropriate including, without limitation, to comply with federal
income tax law and rules. Notwithstanding anything else in this Plan, the
Committee may, in its sole discretion, accelerate the distribution of Deferred
Shares in cases of extreme emergency or hardship.

 

The Director shall elect (a) that Deferred Shares be distributed in a lump sum
or in annual installments (not exceeding 10), and (b) that the lump sum or first
installment be distributed on the tenth day of the calendar year immediately
following either (i) the year in which the Director ceases to be a Director of
the Company or (ii) the earlier of the year in which the Director ceases to be a
Director of the Company or a date designated by the Director; provided, however,
that any such election shall be subject to Section 5(g) hereof. Installments
subsequent to the first installment shall be distributed on the tenth day of
each succeeding calendar year until all of the Director’s Deferred Shares shall
have been distributed.

 

In the event the Director should die before all of the Director’s Deferred
Shares have been distributed, the balance of the Deferred Shares shall be
distributed in a lump sum to the beneficiary or beneficiaries designated in
writing by the Director, or if no designation has been made, to the estate of
the Director.

 

All lump sum distributions of Deferred Shares shall be in whole shares of Common
Stock, with cash to be paid in lieu of fractional shares. The number of shares
to be distributed on each installment date to a Director who has elected to
receive shares in annual installments shall be determined by multiplying the
number of Director’s remaining Deferred Shares by a fraction the numerator of
which is one and the denominator of which is the then remaining number of annual
installments (including the immediate installment); all such distributions shall
be in whole shares of Common Stock, with cash to be paid in lieu of fractional
shares for the final installment and fractional shares to be rounded to the
nearest whole number for all other installments.

 

 

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(e)           Dividend Equivalents. Deferred Shares shall be credited with an
amount equal to the dividends which would have been paid on an equal number of
outstanding shares of Common Stock (“Dividend Equivalents”). Dividend
Equivalents shall be credited (i) as of the payment date of such dividends, and
(ii) only with respect to Deferred Shares credited to such Director prior to the
record date of the dividend. Deferred Shares held pending distribution shall
continue to be credited with Dividend Equivalents.

 

Dividend Equivalents so credited shall be converted into an additional number of
Deferred Shares as of the payment date of the dividend (based on the Fair Market
Value on such payment date). Such Deferred Shares shall thereafter be treated in
the same manner as any other Deferred Shares under the Plan.

 

(f)           Transfer of Shares. All shares transferable pursuant to this
Section 5(f) will be so transferred unless the Director has made a Deferral
Election pursuant to Section 5(d) hereof, in which case only those shares that
are not subject to the Deferral Election will be so transferred.

 

Shares of Common Stock issuable to a Director under Sections 5(a) and 5(b)
hereof shall be transferred to such Director as of each Accounting Date. The
total number of shares of Common Stock to be so transferred under Section 5(a)
hereof shall be determined by dividing (w) one-quarter (1/4) of such Director’s
Basic Fee payable during the Plan Year commencing on such Accounting Date by (x)
the Fair Market Value of a share of Common Stock on such Accounting Date. Shares
of Common Stock issuable to a Director under Section 5(c) hereof shall be
transferred to such Director on August 31st, November 30th, February 28th and
May 31st of each Plan Year. The total number of shares of Common Stock to be so
transferred on each such date shall be determined by dividing (y) the product of
(1) the percentage specified by the Director pursuant to Section 5(c) hereof and
(2) the Director’s Maximum Cash Compensation payable for services rendered in
the quarter ending on August 15th, November 15th, February 15th or May 15th of
such Plan Year, as the case may be, by (z) the Fair Market Value of a share of
Common Stock on such date. The registrar for the Company will make an entry on
its books and records evidencing that such shares (including any fractional
shares) have been duly issued as of such dates; provided, however, that a
Director may in the alternative elect in writing prior thereto to receive a
stock certificate representing the number of whole such shares acquired plus
cash in lieu of any fractional shares.

 

(g)           Change in Control. Upon a Change in Control, all Deferred Shares,
to the extent credited prior to the Change in Control, shall be paid immediately
in cash. For purposes of this Section 5(g), with respect to determining the cash
equivalent value of a Deferred Share, the Fair Market Value of such a Deferred
Share shall be deemed to equal the greater of (i) the highest Fair Market Value
per share at any time during the 60-day period preceding a Change in Control and
(ii) the price of a share of

 

 

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Common Stock which is paid or offered to be paid, by any person or entity, in
connection with any transaction which constitutes a Change in Control pursuant
to this Section 5(g).

 

For purposes of the Plan, a “Change in Control” shall have occurred if:

 

(i)         any “person”, as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common Stock of the
Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding voting securities;

 

(ii)         during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii), or (iv) of this
Section 5(g) whose election by the Board or nomination for election by the
Company’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;

 

(iii)         the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity (or any parent of the Company
or such surviving entity) outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no “person”
(as herein above defined) acquired more than 50% of the combined voting power of
the Company’s then outstanding securities; or

 

 

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(iv)         the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets (or any transaction
having a similar effect).

 

 

6.

Effect of Certain Changes in Capitalization.

 

In the event of any recapitalization, stock split, reverse stock split, stock
dividend, reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction or event
affecting the Common Stock, the maximum number or class of shares available
under the Plan, and the number or class of shares of Common Stock to be
delivered hereunder shall be adjusted by the Committee to reflect any such
change in the number or class of issued shares of Common Stock.

 

 

7.

Term of Plan.

 

The Plan shall remain in effect until all authorized shares have been issued,
unless sooner terminated by the Board.

 

 

8.

Amendment; Termination.

 

The Board may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part.

 

 

9.

Rights of Directors.

 

Nothing contained in the Plan or with respect to any grant shall interfere with
or limit in any way the right of the stockholders of the Company to remove any
Director from the Board, nor confer upon any Director any right to continue in
the service of the Company as a Director.

 

 

10.

General Restrictions.

 

(a)         Investment Representations. The Company may require any Director to
whom Common Stock is issued, as a condition of receiving such Common Stock, to
give written assurances in substance and form satisfactory to the Company and
its counsel to the effect that such person is acquiring the Common Stock for his
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with Federal and applicable state
securities laws.

 

(b)         Compliance with Securities Laws. Each issuance shall be subject to
the requirement that, if at any time counsel to the Company shall determine that
the listing, registration or qualification of the shares upon any securities
exchange or under any state or Federal law, or the consent or approval of any
governmental or regulatory

 

 

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body, is necessary as a condition of, or in connection with, the issuance of
shares hereunder, such issuance may not be accepted or exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained on conditions acceptable to the Committee.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification.

 

(c)         Nontransferability. Deferred Shares under the Plan shall not be
transferable by a Director other than by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.

 

 

11.

Withholding.

 

The Company may defer making payments under the Plan until satisfactory
arrangements have been made for the payment of any Federal, state or local
income taxes required to be withheld with respect to such payment or delivery.

 

 

12.

Governing Law.

 

The Plan and all rights hereunder shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

 

13.

Headings.

 

The headings of sections and subsections herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan.

 

 

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MARSH & McLENNAN COMPANIES, INC.

DIRECTORS’ STOCK COMPENSATION PLAN

 

ANNEX I

 

 

 

1.

Purpose.

Pursuant to resolutions adopted by the Board of Directors of Marsh & McLennan
Companies, Inc. on May 21, 1997, the Advisory Director program was discontinued
and, in recognition of such discontinuance, those nine Directors who, as of May
20, 1997, had been receiving compensation for their services as members of the
Board (the “Designated Directors”) with the reasonable expectation that they
would participate in the Advisory Director program upon retirement from the
Board, were each granted 2,000 shares of Common Stock (together with additional
shares purchased with dividends as provided in Section 4 hereof, the
“Supplemental Grant Shares”) to be held in a custodial account controlled by the
Company for later delivery to the Designated Director. This Annex I to the Marsh
& McLennan Companies, Inc. Director Stock Compensation Plan (the “Plan”) is
intended to establish the terms and conditions under which the Supplemental
Grant Shares are to be held and administered by the Company and distributed to
the Designated Directors.

 

 

2.

The Plan.

This Annex I to the Plan is a supplement to and is part of the Plan, applicable
only to the Designated Directors (namely, Lewis W. Bernard, Robert F. Erburu,
Ray J. Groves, Richard S. Hickok, Richard M. Morrow, George Putnam, Adele Smith
Simmons, Frank J. Tasco and R.J. Ventres) and only with respect to the
Supplemental Grant Shares. The Plan, exclusive of this Annex I, is hereinafter
referred to as the “Basic Plan.” Unless otherwise specified herein or it is
clear from the context, the provisions of, including the definitions contained
in, the Basic Plan, as in effect from time to time, shall apply to this Annex I.

 

 

3.

Common Stock Reserved.

The Supplemental Grant Shares shall be included in the shares of Common Stock
authorized for issuance under the Plan pursuant to, and be subject to the
numerical limitation contained in, Section 4 of the Basic Plan. However, the
Supplemental Grant Shares to be delivered shall be exclusively previously issued
shares reacquired and held by the Company, i.e., treasury shares.

 

 

4.

Custodial Account; Distribution.

The Supplemental Grant Shares shall be held for each Designated Director in a
custodial account maintained by the Company. Cash dividends paid with respect to
Supplemental Grant Shares shall be used to purchase

 

 

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from the Company additional shares to be included in the Designated Director’s
account as additional Supplemental Grant Shares. Unless the Designated Director
has elected to defer distribution as provided in Section 5 hereof, and subject
to the provisions of Sections 6 and 7 hereof, the Supplemental Grant Shares
shall be distributed to the Designated Director (in whole shares of Common Stock
and cash in lieu of any fractional shares) on retirement from the Board on
attaining the age of 72 years, whichever shall be later (the “Normal
Distribution Date”).

 

5.

Deferral Election.

A Designated Director, independent of any election made under the Basic Plan
with respect to Deferred Shares, may elect to defer the receipt (a “Supplemental
Deferral Election”) of all or any portion of the Supplemental Grant Shares
otherwise distributable pursuant to Section 4 hereof by executing and filing
with the Secretary of the Company a document (the “Supplemental Deferral
Election Form”) as described below.

In such case, the Supplemental Grant Shares subject to the Supplemental Deferral
Election (the “Supplemental Deferred Shares”) shall continue to be held in a
custodial account maintained by the Company (and continue to be Supplemental
Grant Shares as defined in this Annex I to the Plan). Subject to provisions of
Sections 6 and 7 hereof, the Supplemental Deferred Shares shall be distributed
to the Designated Director as set forth in the Supplemental Deferral Election
Form. The Supplemental Deferral Election Form shall specify the percentage (in
increments of 10%, the minimum being 10% and the maximum being 100%) of the
Supplemental Grant Shares for which the Supplemental Deferral Election is being
made and that distribution of the Supplemental Deferred Shares shall occur
either in a lump sum on the tenth day of the calendar year next following the
Normal Distribution Date or in annual installments (in such number, not
exceeding ten, as the Designated Director shall elect) commencing on such tenth
day and continuing on the tenth day of each succeeding calendar year until all
of the Designated Director’s Supplemental Deferred Shares have been distributed.
Notwithstanding the foregoing provisions of this Section 5, the Committee may,
in its sole discretion, accelerate the distribution of Supplemental Deferred
Shares in cases of extreme emergency or hardship. A lump sum distribution of
Supplemental Deferred Shares shall be in whole shares of Common Stock, with cash
to be paid in lieu of fractional shares. The number of shares to be distributed
on each installment date to a Designated Director who has elected to receive
shares in annual installments shall be determined by multiplying the number of
the Designated Director’s remaining Supplemental Deferred Shares by a fraction
the numerator of which is one and the denominator of which is the then remaining
number of annual installments (including the immediate installment); except for
distributions being made to a book-entry account maintained for the Designated
Director which allows for fractional shares, all such distributions shall be in
whole shares of Common Stock, with cash to be paid in lieu of fractional shares
for the final installment and fractional shares to be rounded to the nearest
whole number for all other installments.

 

 

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6.

Death.

In the event the Designated Director should die before all of his or her
Supplemental Grant Shares have been distributed, all undistributed Supplemental
Grant Shares shall be distributed in a lump sum (in whole shares of Common Stock
and cash in lieu of any fractional shares) to the beneficiary or beneficiaries
designated in writing by the Designated Director, or if no designation has been
made, to the estate of the Designated Director. Any beneficiary designation in
effect with respect to the Basic Plan, as provided in Section 5(d) thereof,
shall be deemed to be a designation pursuant to this Section 6 as well, unless
the Designated Director has made a separate designation pursuant hereto.

 

7.

Change in Control.

Upon a Change in Control, the Supplemental Grant Shares shall be deemed to be
“Deferred Shares” under the Basic Plan with respect to the provisions of Section
5(g) thereof, which section shall be deemed applicable to the Supplemental Grant
Shares.

 

8.

Nontransferability.

Until the Supplemental Grant Shares are delivered to the Designated Director,
such shares shall not be transferable other than by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Internal Revenue Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.

 

 

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