MMC plans senior executives’ incentives after JLT buy

Marsh & McLennan Companies (MMC) CEO Dan Glaser has said management will work hard to retain talent at the business following the company’s acquisition of JLT.

Speaking on a third-quarter conference call, the executive said senior leaders at the business would have to create an environment that “celebrates and preserves” the distinct cultures at the insurance broking firms.

Responding to an analyst’s question, Glaser said he wanted employees to choose to stay at the company because of its culture.

“I never believe you can buy people’s loyalty,” he said.

However, Glaser added MMC would develop some kind of retention system to prevent an exodus of talent.

The executive did not give further details but said the scheme would apply only to some senior individuals.

Earlier this month multiple sources identified star JLT employees who could be targets for potential rival firms.

Underwriters and brokers have warned of a culture clash between MMC, characterised as more traditional, and JLT, considered by some in the market to be more entrepreneurial.

Glaser’s comments came as the company published its results for the quarter, reporting a 5 percent year-on-year decrease in operating profits.

The results were skewed by a new revenue recognition standard adopted earlier this year.

Despite the slight decrease, the broking and consulting giant beat analysts’ expectations for the quarter, reporting adjusted earnings per share of $0.78, compared to a consensus of $0.74.  

MMC’s Q3 adjusted operating income was $535mn.

Glaser said MMC would record a non-cash charge of $100mn arising from a foreign exchange hedging contract related to the JLT deal.

Marsh signed the contract to hedge against the risk of currency fluctuations between the takeover agreement and the deal closing.

MMC has also incurred a $3mn charge relating to the bridge loan being provided by Goldman Sachs for the transaction.