Wednesday, June 22, 2005
MassMutual fired CEO Robert O'Connell on June 2 after an investigation triggered by a complaint by his wife about an affair he was allegedly having with another executive that came to the attention of the board of directors. The investigation turned up evidence that O'Connell engaged in unauthorized trading in a supplemental compensation account, bought a condominium in Florida at a development financed by MassMutual at a below-market price, and misled the California Insurance Department about the transaction. In response to the termination, the Massachusetts Attorney General and Secretary of State William Galvin initiated investigations, and MassMutual filed a copy of the termination letter given to O'Connell with a state court as part of a filing resisting a subpoena issued by Galvin's office. The letter details what the board concluded was "a systematic and pervasive pattern of willful abuse of authority" that included causing the company to make large severance payments to employees for what the letter called "personally motivated and retaliatory terminations."
In addition to his executive position, O'Connell was also a member of MassMutual's board of directors, and there is meeting of the board on June 22 to determine whether to remove him for cause. O'Connell plans to fight his removal, according to a Boston Globe article (here), which also discusses the termination letter. In a publicly-traded company, the right to remove a director is usually reserved to the shareholders, but as a mutual insurance company, MassMutual's board holds the authority to remove directors. This promises to be an ugly fight for both sides, and with ongoing civil and criminal investigations, the matter is unlikely to be resolved for some time. (ph)