MMC Shuffles out CEO
“Marsh & McLennan’s financial performance in 2007 has fallen far short of our expectations,” said Stephen Hardis, the non-executive chairman of the board, in a statement . The New York-based insurance broker said its board would “evaluate strategies to enhance shareholder value,” which a Reuters report noted is often considered code for a possible sale of assets.
“The Board has taken this performance into account, and listened to concerns raised by some of the company’s largest shareholders in recent quarters, in making this change,” Hardis said in the announcement. “The Board will continue to actively oversee MMC’s portfolio of businesses and evaluate strategies to enhance shareholder value, including optimizing the company’s capital structure, reviewing its mix of businesses and improving operating performance, particularly at Marsh. To that end, we hired Dan Glaser as Chairman and Chief Executive Officer of Marsh to significantly improve Marsh’s profitability. The Board believes that the full recovery of Marsh is essential to maximizing shareholder value in the most prudent and sustainable manner.”
The news – and investors’ bets on a sale – sent the firm’s share prices higher on Friday.
Taking the Helm
Cherkasky took over in October 2004 when the company was in the midst of a bid-rigging scandal, facing charges from then-New York Attorney General Eliot Spitzer. Cherkasky brought MMC through the scandal, agreeing to set up an $850 million fund to compensate clients hurt by business practices it admitted were “shameful” (See MMC Settles ‘Shameful’ Bid-Rigging Case ). MMC also gave up a significant portion of revenues that came directly from insurers, Reuters said.
Cherkasky had difficulty running Marsh & McLennan’s diverse operations, particularly its Marsh unit. He fired the Marsh unit’s chief executive, Brian M. Storms, this year for failing to raise revenues amid defections of major brokers and clients (See Storms Out at Marsh ). Other than the Marsh unit, the MMC family of companies includes Kroll, a security consulting unit, Guy Carpenter, Mercer Human Resource Consulting, and Oliver Wyman Group.
Cherkasky will remain at his post until his replacement is named, according to the announcement.