Good morning, everyone.
Good morning.
Welcome to The Marsh & McLennan Companies' 2013 Annual Meeting of Stockholders. I'm Lucy Fato, the Deputy General Counsel and Corporate Secretary for the company. Before we begin, just a couple of reminders. Today's meeting is being webcast, so if you're joining us in person, please turn off cell phones and BlackBerrys to avoid interference with the broadcast. Second, my favorite part, please note that remarks made by management may include statements relating to future events or results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. A variety of factors could cause the company's actual results to differ materially from those expressed or implied in any forward-looking statement made today. Remarks made today may include non-GAAP measures. Please refer to our filings with the Securities and Exchange Commission for additional information.
With that, I'd like to turn the meeting over to our Independent Chairman, Lord Lang.
Good morning. I'm Ian Lang, the independent Chairman of Marsh & McLennan Companies, Inc. On behalf of the company, directors, and officers, welcome, and thank you for coming to our annual meeting of stockholders. Before turning to today's agenda, I would like to introduce the company's other directors.
We have Zach Carter, a partner in the law firm of Dorsey & Whitney, Óscar Fanjul, Vice Chairman of Omega Capital, Ed Hanway, former Chairman and CEO of Cigna Corporation, Elaine La Roche, a Senior Advisor to China International Capital Corporation, U.S., Stephen Mills, Senior Vice President and Group Executive, Software and Systems, IBM, Bruce Nolop, former Chief Financial Officer of E-Trade Financial Corporation and author of a definitive study of the role of the corporate chief financial officer, Marc Oken, Managing Partner of Falfurrias Capital Partners and former Chief Financial Officer of Bank of America Corporation, Morton Schapiro, President of Northwestern University, Adele Simmons, Vice Chair of Metropolis Strategies and President of the Global Philanthropy Partnership, Lloyd Yates, Executive Vice President of Regulated Utilities for Duke Energy, and Dave Yost, former President and Chief Executive Officer of AmerisourceBergen.
I think we're fortunate, ladies and gentlemen, in the range and depth of experience and expertise of our board. Dan Glaser also joins me here on the stage. In addition to being the company's President and CEO, Dan is also a member of the board of directors. More of him anon. Scott Coates and Joe Echevarria of Deloitte & Touche are also in attendance. Deloitte & Touche is the company's independent registered public accounting firm, and Scott and Joe are available to answer questions during the Q&A session later in the program. I hereby call the 2013 Annual Meeting of Stockholders of Marsh & McLennan Companies to order. After proceeding with the formal part of the meeting, we will announce the preliminary voting results. Dan will then speak about the company, following which he will open the floor to questions.
Please save any questions you might have until that time. We have received affidavits confirming the distribution of the 2012 annual report, the 2013 notice of annual meeting and proxy statement, and voting instructions to stockholders of record on March the 18th, 2013. These affidavits, together with copies of the materials delivered and the list of stockholders entitled to vote at this meeting, have been filed with the corporate secretary. The list of registered stockholders as of the record date for this meeting is available for inspection by any stockholder at the sign-in table. Representatives of Broadridge have been appointed to serve as inspectors of election for this meeting and have taken their inspector's oath. The inspectors have reported that approximately 483 million shares, meaning 88% of the shares issued outstanding and entitled to vote, were represented at the beginning of this meeting.
This constitutes a majority of the outstanding shares entitled to vote, and therefore, a quorum is present for the transaction of business. The inspector's oath and the preliminary report of the inspectors have been filed with the corporate secretary. We're meeting today to vote on the matters described in the 2013 proxy statement. Voting will take place on these matters after they are presented at this meeting. We have not received notice of any other matter to be brought before the meeting in accordance with the notice requirements set forth in our bylaws. The first order of business is the election of 13 persons to serve as directors with terms expiring in 2014. As noted in the proxy statement, the company has a majority voting standard in the case of director elections that, like today's, are uncontested.
Accordingly, each nominee must receive a majority of the votes cast with respect to his or her nomination in order to gain re-election to the board. The board of directors nominated Zachary Carter, Óscar Fanjul, Daniel Glaser, Edward Hanway, Elaine La Roche, Stephen Mills, Bruce Nolop, Marc Oken, Morton Schapiro, Adele Simmons, Lloyd Yates, David Yost, and myself, Ian Lang, for re-election as directors. No other nominations were submitted to the company. The second item on the agenda, commonly known as a say on pay proposal, enables our stockholders to approve by non-binding vote the compensation of our named executive officers as disclosed in the 2013 proxy statement. The third item on the agenda calls for the stockholders to ratify the appointment of Deloitte & Touche as the company's independent registered public accounting firm for the fiscal year ending December 31st, 2013. The audit committee previously approved this appointment.
The polls are now open. Stockholders present who have already voted by proxy need not vote again unless they wish to change their votes. If you still have a proxy card, please give it to an inspector of election. Will the inspectors please identify themselves? Thank you. An inspector will furnish a ballot to any stockholder or stockholder representative who wishes to vote in person. Please raise your hand if you wish to vote in person, and we will provide you with a ballot. The polls are now closed. Will the inspectors please collect any ballots? The preliminary tally, based on the votes cast as of the start of this meeting, shows the following results. With regard to item one, a majority of shares voted were voted in favor of each of the director nominees, and thus they have all been reelected.
For item two, a majority of the shares present or represented and entitled to vote have voted in favor. Thus, the stockholders of Marsh & McLennan Companies have approved, on an advisory basis, the compensation of the company's named executive officers. Finally, for item three, a majority of the shares present or represented and entitled to vote have voted in favor. Thus, the appointment of Deloitte & Touche as the company's independent auditors for 2013 has been ratified. The inspectors of election will provide a final certified report of the vote following the meeting. That report will become a part of the record of this meeting and is not expected to affect the outcome of the voting announced today.
A summary of the outcome of the vote will be posted to the company's website, and details of the final voting results will be filed with the SEC on Form 8-K within four business days. Ladies and gentlemen, I am a Scotsman, as my name, if not my accent, indicates, and we Scots have a reputation for being extremely careful with our money. Not many people know that copper wire was invented by two citizens of Aberdeen quarreling over $0.01. Had there been $0.02 on that occasion, there had need have been no quarrel. There might have been no copper wire.
Now, before I adjourn the formal part of the meeting, I would like to announce that at a board of directors meeting earlier this morning, the board increased the company's quarterly dividend by $0.02 and declared a dividend of $0.25 per share on outstanding common stock payable on August the 15th, 2013, to stockholders of record on July the 11th, 2013. In addition, the board approved an increase in the company's share repurchase program, allowing management to purchase up to $1 billion of the company's common stock. The formal part of Marsh & McLennan Companies' 2013 annual meeting is now adjourned. I will now turn the floor over to Dan Glaser. As you know, Dan became the company's President and Chief Executive Officer on the 1st of January this year.
In selecting Dan to succeed Brian Duperreault, to whom we owe much, the board recognized Dan's strong leadership skills and many impressive accomplishments since he rejoined the company as CEO of Marsh in December 2007. Dan has had a seamless transition since assuming the CEO role at Marsh & McLennan Companies, a credit to both Dan and his leadership team, as they have pursued initiatives to position the company for continued profitability and long-term sustainable growth. Dan has continued to build on his reputation. It gives me great pleasure to turn the floor over to him to provide you with an update on the company. Dan.
Thank you, Ian. Good morning.
Good morning.
Thank you all for joining us. Before I begin, I'd like to introduce the members of our senior management team. I'm going to ask them to stand as I call out their names. First, our four operating company CEOs, Peter Zaffino of Marsh, Julio Portalatin of Mercer, Alex Moczarski of Guy Carpenter, and John Drzik of Oliver Wyman. Also joining us are Peter Beshar, our General Counsel, Mike Bischoff, our CFO, Scott Gilbert, our Chief Risk and Compliance Officer, and Lucy Fato, our Chief HR Officer. David Nadler, our Vice Chairman, could not be with us today because of a prior commitment. We have an excellent leadership team, and I'm grateful to them for their commitment to MMC and its clients, colleagues, and shareholders. Although I was appointed CEO at the beginning of January, I'm hardly new to the company.
I thought I'd begin by telling you a bit about my background and about the wonderful way that my professional and personal lives have centered around Marsh & McLennan for the past three decades. I started my career at Marsh in 1982 as a trainee insurance broker in the Marine & Energy department in New York. I was not quite 22 years old. Soon thereafter, I met my wife, Emily, at Marsh. We set up our first home in Al Khobar, Saudi Arabia, in 1985, when I had the opportunity to run a small Marsh branch office. In 1987, I transferred to Marsh in London, where my family and I remained for several years. All told, I have spent 40% of my career living and working outside of the U.S., which has made me powerfully aware of the opportunities that exist in markets around the world.
I had the great pleasure to return to MMC as the CEO of Marsh in December of 2007. The reinvigorated Marsh leadership team provided focus and discipline to the company. Thousands of dedicated Marsh colleagues did the rest. By 2010, we had tripled the profitability of Marsh. I was then appointed Group President and Chief Operating Officer of Marsh & McLennan Companies. It was in that position that I came to appreciate the unique capability of this company to craft innovative solutions to the most complex issues of the day. I am privileged and ready to lead this company forward. I commit to you, our shareholders, our colleagues, and our clients that I will honor the trust that you have placed in our company and in me personally.
Marsh & McLennan Companies has a strong foundation built upon the quality and commitment of our colleagues and our capabilities in risk, strategy, and human capital. Our clients rely on us for industry knowledge, intellectual capital, and services and solutions that help them compete and thrive in a fast-changing world. A world that is increasingly framed by large, complex problems and uncertainty. We help our clients manage and transfer risk so they can grow their businesses and seize opportunities in any business environment. We provide advice and solutions that allow them to serve the needs of their employees, and we assist them in developing their own strategic paths to growth. The work that we do is integral to the creation of value for companies, individuals, and communities.
I am proud that our firm is an important influence on the evolving business landscape, as we have been throughout our long history, and that we provide strategic advice and solutions that support economic growth. I'm pleased to say that our performance in 2012 demonstrates that we are successfully executing our strategy for long-term growth. We produced revenue of $11.9 billion, with growth of 4% on an underlying basis, adjusted operating income grew 12% with meaningful margin expansion. For the third consecutive year, we delivered growth in underlying revenue and profitability in each of our four operating companies. Our Risk and Insurance Services segment produced strong underlying revenue growth of 5% in 2012. Adjusted operating income rose 11%, with margins expanding to their highest levels since 2003.
To put this impressive performance into perspective, over the past five years, the adjusted margin for our Risk and Insurance Services segment has more than doubled, reflecting the strength of our core earnings, and also underlying the operating leverage we have built into the business. The Consulting segment also delivered solid underlying revenue growth of 4% in 2012. As you know, we set out to increase the profitability of this segment, and we are succeeding despite the challenging economic environment, especially in Europe. The segment's adjusted operating income increased 15% in 2012, and the margin expanded to its highest level since 2004. As we recently reported, our strong results continued in the first quarter of 2013. On a consolidated basis, adjusted operating income rose 16%, reflecting double-digit growth and exceptional margin expansion in both Risk and Insurance Services and Consulting.
We saw excellent results in 2012, and we're pleased that 2013 is off to a great start. The blueprint for our continued success is our four pillar strategy to create exceptional value and superior returns over the long term. The first pillar is to achieve long-term growth in revenue and earnings. Profitable growth allows us to make the investments that propel our business, investments in the innovation clients expect, in new products and solutions, in our colleagues' development, and in acquisitions that broaden our capabilities. Over the past three years, compound annual growth in adjusted operating income was 13%, and annualized total shareholder return was 20%. Significantly exceeding the 11% return for the S&P 500 index. The second pillar is to maintain the low capital requirements of our business. We favor businesses that have low capital intensity. The third is to manage the business to achieve high cash generation.
Our ability to generate strong cash flow has given us excellent financial flexibility, including the means to pay dividends, make acquisitions, and repurchase stock. Over the course of 2012, our uses of cash approached $1.3 billion, including the payment of almost $500 million in dividends. We increased the quarterly dividend 5% to $0.23 per share in 2012. As you heard earlier today, we've increased our dividend by 9%, from $0.23 to $0.25 per share, starting in the third quarter. In 2012, we used $230 million for share repurchase. As Ian Lang mentioned, our board has authorized an increase in the company's share repurchase program, allowing our management to buy back up to $1 billion of our common stock. We spent $340 million for acquisitions, including Alexander Forbes in South Africa, our largest acquisition in 2012, and 10 acquisitions for the Marsh & McLennan Agency.
We made $200 million of discretionary pension contributions. The fourth and final pillar is to manage risk intelligently. Our company has gone from an emphasis on risk reduction and risk avoidance, to practicing best-in-class intelligent management of risk. We encourage a culture of risk mindfulness, supported by our code of conduct, The Greater Good. Successful execution of our four-pillar strategy has yielded impressive results, and we intend to build on this foundation in 2013 and in the years ahead. Before I take your questions, I would like to thank Lord Lang and our other members of the board for their insights and wisdom in guiding this company. I want to express our gratitude to Brian Duperreault , who retired as CEO at the end of 2012. He has left an indelible mark on our firm. I also want to thank our 54,000 colleagues for their hard work and dedication.
As a professional services firm, our success relies on your talents and energy. We take tremendous pride in the strong relationships we have forged with our clients, and thank them for the trust they place in us. Finally, I thank you, our shareholders, for your continued support. With that, I'll be happy to take your questions. Thank you.
Any questions? I don't see any questions.
Okay, question.
Oh.
After such a wonderful speech, I think you deserve at least one clap. Judging from what you said about your past with this company, where do you see the future five years from now?
Well, thank you for that question. Of course, questions about the future are always very interesting and actually where very much is the focus of our board and our management team. We spend our time talking less about where we've been and more about where we can take this firm. I think we're very well-positioned because frankly, companies need advice, and they need advice particularly in the areas of risk, human capital, and strategy. If anywhere in the world that you're operating, whether it's in a middle-market business or in a large account segment, the executive teams are all grappling with similar problems. When you ask those C-suites, those executive teams, what are the issues that concern them most people will start talking about issues like political stability, regulation, macroeconomic factors.
When they start talking about their company, it very quickly becomes, are we strategically positioned properly? Are we positioned well for growth? What are alternative paths? What are alternative solutions? How do we keep our talent moving forward? How do we engage and motivate our colleague base? Are we grappling and dealing with the risks that are facing our firm? Are we trying to anticipate those possible risks? Risk strategy and human capital, I think, is terrific strategic positioning for the company. Our continued involvement in giving advice and then having implemented solutions, helping our clients find their own paths to growth, I think, is where we'll be five years from now. That is the bedrock of our firm. Please.
Just to follow up.
You seem to be on a roll. Go ahead, sir.
I don't know if I want to be dealing with [inaudible] . I want to just make a recommendation that the board of directors, since I don't know you personally at all, and this is my first year going to be here for several years, because in the past, when we used to come to this room and there were seriously different executives over there that used to talk. I got tired of it. I just want to recommend to the board of directors that Mr. Glaser here stay with our company until he retires.
Thank you.
Any other questions? Okay. Seeing no questions, I think the meeting's adjourned.
Thank you.
Thank you, everyone.