Marsh & McLennan Companies Chief Executive Officer Michael G. Cherkasky has signed a three-year contract worth $1 million in base salary and potentially millions in annual bonuses over the life of the contract.
The former prosecutor with the New York District Attorney's Office took his post in October 2004 after a company scandal over commercial insurance price-fixing forced the ouster of then CEO Jeffrey Greenberg.
In a filing with the Securities and Exchange Commission Friday, MMC revealed that it entered into a new employment agreement with Mr. Cherkasky, on July 25, covering the next three years. The contract renews for successive one-year terms after the three years, unless Mr. Cherkasky or MMC decides not to renew the agreement.
If MMC does not renew the agreement, Mr. Cherkasky's equity awards will vest. Under this plan, he will be eligible for stock awards with a combined annual target value of $5 million.
Also, if the company does not renew his contract before he turns 62, MMC will pay him an amount equal to his salary and average bonus. Mr. Cherkasky is 54 years old.
In addition to his annual salary, Mr. Cherkasky will be eligible for an annual bonus opportunity ranging from 150 to 300 percent of his annual base salary, with a minimum $2.5 million for 2005, the filing said.
The bonus awards are based on achievement goals outlined in the agreement.
The filing spelled out other salary and bonus terms he would be entitled to if he is terminated or if control of the company changes hands.
For the most part, he would be subject to a non-compete agreement for 24 months following termination.
Mr. Cherkasky took over New York-based MMC after Mr. Greenberg left the company in the face of mounting pressure from a lawsuit filed by New York Attorney General Eliot Spitzer.
Mr. Spitzer sued MMC's insurance brokerage division, Marsh, alleging, among other things, that it used contingent commissions to disguise kickbacks from certain insurers to steer business in its direction and fix prices.
The company was under a regulatory cloud even before the allegations of insurance brokerage misdeeds, after it was found that the firm's investment arm, Putnam, had engaged in market-timing sales of mutual funds, and its consulting firm, Mercer, was involved in recommending, what Mr. Spitzer said was an excess compensation package for the outgoing New York Stock Exchange head Dick Grasso.
At the time of the suit, Mr. Spitzer said he would not negotiate with the then management of MMC. Shortly after, Mr. Greenberg and other high level executives left the firm and Mr. Cherkasky, who had been the CEO of Marsh Kroll, the risk mitigation services firm Marsh acquired in May of 2004, took over.
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