MassMutual Alleges ‘Willful Abuse of Authority’ in Firing CEO O’Connell

June 23, 2005

The board of directors of the Massachusetts Mutual Life Insurance Company in Springfield, Mass. today announced that it terminated for cause Robert J. O’Connell’s employment as the company’s chairman, president, and chief executive officer, effective immediately.

On June 2, 2005, the company gave O’Connell notice of its intent to terminate his employment. That notice was required under the terms of O’Connell’s employment agreement.

In taking this action, the board unanimously determined that O’Connell had engaged in “a systematic and pervasive pattern of willful abuse of authority, violations of the company’s code of conduct, and other acts of willful gross misconduct.”

Among the specific reasons the board cited for its action were:
— That O’Connell engaged in willful malfeasance with respect to company procedures related to his supplemental compensation account, directly resulting in over a $30 million improper obligation to him and a comparable recorded expense to the company;
— That O’Connell caused the company to sell him a condominium at the company’s Marco Island, Florida development, an asset of the company, without the knowledge or approval of the board, for an amount
substantially below the market price at which the company expected to
sell the unit;
— That O’Connell interfered with the investigation and reprimand of two of his family members concerning the improper disclosure of confidential information of OppenheimerFunds, a MassMutual subsidiary;
— That O’Connell took or diverted company non-financial assets for
his personal ends, including use of company aircraft for the personal
use of his family and friends;
— That O’Connell caused payment of unwarranted and excessive
separation payments to be made to company personnel in connection with personally motivated and retaliatory terminations of employment;
— That O’Connell engaged in abusive and improper management of the company, including retaliatory behavior against employees who
tried to act in the company’s best interests; and
— That O’Connell inhibited or prevented communication between company officers and employees and members of the board, and attempted to restrict the board’s ability to obtain information from company officers and employees.

“The board’s action with regard to the termination of Mr. O’Connell’s employment is consistent with the highest standards of corporate governance and the board’s zero tolerance for unethical and unprofessional behavior,” said James Birle, chairman of the board.

O’Connell met with MassMutual’s board on Thursday to respond to the company’s decision to fire him. O’Connell has denied wrongdoing.

Michael Keating, one of O’Connell’s lawyers, told Associated Press that two reports which were released after the company investigated his client clear him of wrongdoing. He said the documents show that O’Connell’s retirement fund transactions had been approved by the company, and the condominium purchase had been handled by three law firms, including MassMutual’s own legal staff.

Keating said the reports also state that O’Connell was never aware of any investigation into his family members until after disciplinary action was taken.

The reports include items such as company employees complaining that O’Connell denied them company tickets to the World Series, according to Keating.

“When you read these reports, what you find is trivia,” Keating said.

But Gregory Markel, a MassMutual lawyer, said the reports are filled with examples of O’Connell misusing his power, retaliating against employees who were trying to expose him and rewarding those who protected him with raises and promotions.

MassMutual had allowed O’Connell and his lawyers to read the 59-page report and the 29-page report during a meeting, but the company wouldn’t not let them keep copies.

O’Connell and his lawyers went to court in Hampden Superior Court on Wednesday trying to get a judge to force the company to give them copies. Judge Constance Sweeney said during the hearing that she did not see why O’Connell’s team was not entitled to receive copies, prompting the insurer to turn over the records.

O’Connell refused comment to reporters afterward, saying his termination agreement with the board barred him from publicly discussing his ouster.

Stu Reese has been named president and CEO.

“While the board acted swiftly and decisively after uncovering Mr. O’Connell’s conduct, we are already working actively with Stu Reese and his office of the CEO, as well as our outside advisors, to develop even stronger systems and controls to better ensure that something like this can never happen again,” Birle stated.

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