MMC » Topics » Executive Compensation Corporate Governance Policies

This excerpt taken from the MMC DEF 14A filed Apr 2, 2009.

Executive Compensation Corporate Governance Policies

Our Board periodically reviews corporate governance practices at MMC on an ongoing basis. In 2007, the Compensation Committee adopted three corporate governance policies affecting executive compensation. The first two policies cover MMC’s executive officers who are subject to Section 16 of the Securities Exchange Act of 1934, while the third policy affects equity-based awards granted to all employees. These policies remained in place during 2008.

 

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Shareholder Approval of Severance Agreements: Shareholder approval is required for any severance agreement with an executive officer adopted on or after May 16, 2007, that provides for a cash severance payment that exceeds 2.99 times his or her base salary and three-year average annual bonus.

 

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“Clawback” of Incentive Compensation in Case of Certain Financial Restatements: MMC may, to the extent permitted by applicable law, cancel or require reimbursement of any annual bonus awards received by an executive officer after July 19, 2007, if and to the extent that:

 

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The amount of the annual bonus award was based on the achievement of specified consolidated and/or operating company financial results, and MMC subsequently restates those financial results;

 

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In the Compensation Committee’s judgment, the executive officer engaged in intentional misconduct that contributed to the need for the restatement; and

 

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The executive officer’s annual bonus award would have been lower if the financial results in question had been properly reported.

In such a case, MMC will seek to recover from the executive officer the amount by which the actual annual bonus award paid for the relevant period exceeded the amount that

 

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would have been paid based on the restated financial results. The policy provides that MMC will not seek to recover compensation paid more than three years prior to the date the applicable restatement is disclosed.

 

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“Double-Trigger” Condition for Vesting of Equity-Based Awards Upon a Change in Control: Beginning with equity-based awards granted on or after March 15, 2007, the Compensation Committee has directed that a “double-trigger” condition apply to the vesting of such awards. Under the double-trigger provision, a change in control of MMC by itself would not cause an employee’s equity-based award to vest, so long as the award is assumed or replaced on equivalent terms. In that case, vesting would occur pursuant to the award’s original vesting schedule or if the employee’s employment terminates without “cause” or for “good reason” during the 24 months following a change in control. The definitions of “cause” and “good reason” for these purposes are substantially similar to those summarized in “Potential Payments Upon Termination or Change in Control—Termination of Employment” at page 62. Equity-based awards granted before March 17, 2007, generally provide that such awards will vest in full upon a change in control of MMC.

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