Marsh & McLennan CEO Michael Cherkasky Undertakes Radical Overhaul

Strategic Insights -

Michael Cherkasky, the newly appointed CEO of Marsh & McLennan, is undertaking a radical overhaul of the company, transforming its image and business practices in an effort to shake off the negative image of the company's ousted CEO Jeffrey Greenberg. Cherkasky's changes include selling the company's $25 million Falcon 900 jet, retrofitting the executive suite into a conference room, and introducing a new era of transparency and accountability. However, Cherkasky faces significant challenges, including restoring the company's reputation after allegations of bid-rigging and collusion, and navigating a complex web of lawsuits and regulatory investigations.

Key Takeaways:

  • Michael Cherkasky, a former prosecutor and security consultant, has been appointed as the new CEO of Marsh & McLennan, succeeding ousted CEO Jeffrey Greenberg.
  • Cherkasky's overhaul includes selling the company's $25 million Falcon 900 jet, retrofitting the executive suite, and introducing a new era of transparency and accountability.
  • The company is facing significant challenges, including allegations of bid-rigging and collusion, class-action lawsuits, and regulatory investigations.
  • Cherkasky has acknowledged that the company has a lot of uncertain customers and is sending out a weekly update to Marsh's 25,000 brokerage customers, detailing reform plans.
  • The company is also eliminating lucrative incentive fees paid by insurance companies in exchange for getting more business, which could result in a 30% reduction in profit.
  • Cherkasky's compensation package is reportedly $1.2 million in base salary and up to $1.2 million in annual bonus, compared to his predecessor's $1.2 million salary and $3.5 million cash-and-stock bonus.
  • Analysts have praised Cherkasky's leadership and strategic abilities, noting that he has no corporate background but has successfully turned around Kroll, a security consulting firm.

Statistics:

  • Marsh & McLennan has 63,000 employees worldwide.
  • The company has 25,000 brokerage customers, whom Cherkasky is targeting with regular updates detailing reform plans.
  • The company's 2003 revenue was $11.6 billion, and its net income was $1.5 billion.
  • The company's stock price has fallen 21% since October 14, when New York Attorney General Eliot Spitzer announced the lawsuit.

Sources:

  • USA TODAY
  • The Corporate Library
  • CJS Securities
  • Sidoti & Co.
  • Marsh & McLennan CAPTION(S) PHOTO