Marsh & McLennan Companies Inc. said its board of directors has adopted a series of amendments to MMC's guidelines for corporate governance designed to improve the company's governance practices.
New York-based MMC is the parent company of insurance broker Marsh. MMC last year was required to create a compliance committee from its board of directors as part of a settlement amending Marsh business practices following an investigation by the New York Attorney General's Office.
MMC said its new amendments introduce the following policies:
o Directors must acquire MMC equity with a value of at least $100,000 within three years of joining the board.
o Senior executives must attain specified levels of MMC equity ownership, based on a multiple of annual salary, over a five-year period.
o As a general matter, directors should not serve on more than four additional public company boards.
o A director elected by the board must stand for re-election at the next annual meeting of stockholders.
o A director who has a significant change in employment or other personal circumstances must offer to resign.
A company spokeswoman said these are new additions to the rules and not revisions to some of the current rules.
"The board of directors continually looks for ways to improve MMC's approach to corporate governance," said Stephen R. Hardis, MMC's independent chairman, in a statement. "The policies announced today result from an ongoing review and are the latest in a series of governance enhancements implemented by the board over the last two years."
"MMC is committed to strengthening all facets of its corporate performance," said Michael G. Cherkasky, MMC's president and chief executive officer. "Striving to improve our governance practices is an important part of that process."
Bruce Ballentine, vice president, senior credit officer, property-casualty insurance with Moody's Investor Service in New York, said the amendments moved MMC closer to industry best practices and served to strengthen the company's governance. He added that this is a trend other companies have been moving toward since a series of corporate scandals broke in 2001.
Ken Bertsch, managing director, corporate governance analysis for Moody's, called the changes "a good thing and consistent with best practice." He added that this is a favorable development and is in keeping with standards many other companies are adopting.
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