The former chief executive of MassMutual Financial Group was wrongfully fired a year and a half ago and is entitled to financial compensation that could be worth as much as $50 million, according to an arbitration decision.
The decision, reached about a month ago, was made public on Friday when the Springfield-based insurance and investment company filed an appeal in Suffolk Superior Court.
Robert J. O’Connell was fired by the company’s board in June 2005 for what it said was “a systematic and pervasive pattern of willful abuse of authority.” O’Connell denied the charges.
“The award contravenes well settled public policy and manifestly disregards applicable law,” the company said in its appeal.
The arbitration award, reached by a three-member panel of the American Arbitration Association, has an estimated worth of $50 million, according to Richard Nicolazzo, a spokesman for O’Connell.
Mark Roellig, general counsel for MassMutual, called the decision “incomprehensible” and estimated the award as worth “upwards of $40 million,” and perhaps as much as $50 million.
“We believe we have no choice but to appeal the panel’s decision because it is simply wrong and flies in the face of important public policy considerations and basic principles of ethics,” the 155-year-old Fortune 100 company said in a letter Friday to all employees.
O’Connell plans to file a motion to dismiss the appeal, said his attorney, Michael Keating.
“Massachusetts has very narrow grounds on which you can challenge a decision by a panel of arbitrators, and none of those grounds are applicable in this case,” Nicolazzo said.
When O’Connell was fired, he received a termination letter that said he inappropriately increased the value of his supplemental retirement account and bought a company-owned condominium in Florida at a below-market price.
The letter also said he interfered in disciplinary efforts aimed at his son and son-in-law, both of whom worked for MassMutual or its subsidiaries.
He was also accused him of retaliating against employees he perceived as enemies and of misusing a company aircraft.
According to O’Connell’s contract he signed in 1998 when he joined MassMutual, he could be fired for a criminal conviction, theft or embezzlement, as well as for “conduct that constitutes willful gross neglect or willful gross misconduct … resulting in material harm to the company.”
The arbitrators said in their decision that “MassMutual did not terminate O’Connell for cause” in accord with his employment agreement and did not follow agreed upon procedures for firing him.
“MassMutual’s board of directors we believe had a vendetta against Mr. O’Connell and had a self-interest in his removal, which was to deprive him of significant financial benefits,” Nicolazzo said. “The arbitrators determined there was not a factual basis to terminate him for cause.”
O’Connell joined MassMutual from AIG in 1998, and in his first full year at the helm the company’s assets under management grew from $176 billion to $206 billion. By 2004, those assets were $325 billion.
He was consistently given positive performance evaluations by the board before his termination and was scheduled to be paid $11.4 million last year in salary and incentives.
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