Sometimes CEO's family stress works out to benefit investors

September 04, 2005|By Andrew Leckey

After Chief Executive Officer Robert O'Connell's estranged wife attempted to enter a board meeting at MassMutual Financial Group to blow the whistle on an affair he was allegedly having with a fellow executive, the resultant stir helped lead to a probe that eventually uncovered a slew of financial secrets.

His indiscretions, according to board members, included fattening his retirement account by tens of millions of dollars, buying a condo from the company at a discount and misusing company aircraft for personal use.

O'Connell, who was fired by the board, has denied wrongdoing.

It was in former General Electric CEO Jack Welch's divorce papers that wife, Jane, shed light on lavish retirement perks that included huge consulting fees, an expensive condo and company aircraft at his disposal. GE's regulatory filings never noted many of the details.

Welch, since remarried, has reimbursed GE for many of his benefits.

All of this directly affects shareholders.

O'Connell and Welch were talented chief executives who served their companies well, but the exorbitant tab for perks was footed by investors who put hard-earned money into the companies.

Corporate lawyers around the country are urging confidentiality agreements for top executives and their spouses as a condition of employment. Not all states favor these, but the trend demonstrates a serious concern.

CEO divorces at companies of all sizes have provided considerable information for business journalists over the years. One might also speculate that fear helps keep some CEO couples together.

Divorce, family squabbles and personality conflicts are painful events not to be wished on anyone. But in a financial world in which many numbers remain shrouded in secrecy, they sometimes blow the whistle to the benefit of average investors.

Andrew Leckey is a Tribune Media Services columnist.

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