News release

PENSION FUNDS FILE SHAREHOLDER PROPOSAL TO CHANGE MARSH & McLENNAN BOARD
Multi-Billion Dollar Putnam Scandal and Weak Oversight To Blame

Washington, DC — Four of the nation’s most powerful public pension funds, in a heightened response to the Putnam mutual fund scandal, announced they are using an anticipated Securities and Exchange Commission (SEC) rule to more easily nominate and elect better leadership on Putnam’s parent company board.

The response comes in the form of a shareholder proposal that seeks access to the proxy to nominate and elect directors not hand-picked by the company. Marsh & McLennan Companies Inc. (NYSE: MMC), which is the parent company of Putnam Mutual Funds, is the target of the resolution for its failure to properly control its money management business and for its severe lack of independent board leadership.

Filing the action are AFSCME Employees Pension Plan, New York State Common Fund, California Public Employees’ Retirement System and the California State Teachers’ Retirement System. Together they hold 6.85 million shares, worth $306,000,000 or about 1.3 percent of the company.

“Marsh & McLennan deserves to be the first company in U.S. history to face a binding proxy access proposal because of its gross failure to have proper controls that could have prevented the Putnam disaster,” said Gerald W. McEntee, AFSCME Employees Pension Plan Chairman. “It is tragic that the board at Marsh & McLennan lacked the independence needed, and today continues to be influenced more by its insiders than the needs of its shareholders. There is no question that shareholders will support the idea of electing a truly independent director to the board if given the opportunity through our shareholder resolution.”

“Investors have pulled more than $32 billion dollars in assets out of Marsh’s Putnam subsidiary due to its involvement in this terrible mutual fund scandal, and Marsh’s stock price is down about 10 percent,” added Alan G. Hevesi, New York State Comptroller and sole trustee of the New York State Common Retirement Fund. “I can’t think of a stronger case worthy of shareholder involvement, and I have no doubt, that given the chance, shareholders will respond favorably to our initiative.”

The problems of Putnam and Marsh & McLennan have been continuously mounting since the trade scandal broke several months ago, said Sean Harrigan, President of CalPERS. “Shareholders do not have any interest in using the proxy statement process to nominate a director unless the problems are so severe they are Enron-esque. Putnam and Marsh & McLennan’s problems are in that category,” he said.

Lack of independence and excessive compensation are also reasons for filing the proposal, he said. “The excessive compensation received by and promised to Lawrence Lasser is outrageous,” he added. Lasser was fired as Putnam’s CEO and pushed off the Marsh & McLennan board, but may collect an estimated $89 million in severance, in addition to having received salary, bonuses, stock options, restricted shares and retirement pay packages worth $163 million over the last five years. “This tells all of us that this board is more concerned about its friends than its owners,” he said.

Jack Ehnes, Chief Executive Officer of CalSTRS said the sponsors are also concerned about the lack of independent board membership. “This board isn’t meeting the needs of shareholders. Now it is time for shareholders to do more than send a message of our dissatisfaction. We must be allowed to use the same process that the company does to elect truly independent directors, who will listen to the shareholders–the real owners of the corporation.”

The resolution will appear on the proxy if the SEC approves the final regulations regarding shareholder access to the proxy next month. The SEC allows early filing of shareholder resolutions regarding proxy access in anticipation of the regulations’ issuance.

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