Natick Policyholder Locks Horns with MassMutual over Rules Changes By Matt Brown April 4, 2014 It's been

about a decade since public scandal rocked Springfield-based insurance giant MassMutual, but concerns about executive and director accountability are again bubbling to the surface. Longtime MassMutual policyholder and Natick resident Jessica Rule is pressing the company to put off action on changes to company by-laws that she says would drastically shift control over the governance of the company away from its policyholders and toward a small coterie of executives and directors. The changes were made last minute, and without input from independent directors or policyholders, Rule alleges, and they shouldn't be ratified during the Springfield-based company's annual meeting April 9. Still, despite the feel-good talk about mutual companies being owned by policyholders, Rule and others who try to exert any real influence over corporate governance may find themselves whistling in the wind. Rule, a CPA, has hired Boston attorney Jason Adkins, of Adkins, Kelston & Zavez, who says he'll be at the meeting to press the case. Together, they have launched a modest public-relations effort to make Rules' complaints known ahead of the April 9 meeting. At issue are several changes to MassMutual's bylaws that would: Reduce the minimum size of the board of directors from 11 to seven members. Eliminate the requirement that the majority of members present at a board meeting are not officers of the company. Reduce the amount of notice for board meetings from 48 hours to 24 hours or less. Eliminate the board's mandatory retirement age of 70 years old. Require members who request a special meeting of the board to pay the company's costs for holding that meeting unless resolutions proposed during that meeting are adopted. Permit the board chairman to adjourn meetings at any time, without notice.

The changes would give a small group of entrenched company insiders wider and more ready control over the governance of the company, shutting out ordinary policyholders unable to respond on short notice, or pay for special meetings, Adkins says.

What really rubs Adkins the wrong way is the claim in MassMutual's proxy statement that the proposed changes would bring the company's bylaws into line with widely accepted industry best practices. "I've never seen bylaws as bad as these, and we've looked at a lot of bylaws," Adkins said. He said the changes were proposed by Mark Roellig, MassMutual's general counsel, in a brief meeting on the last day proposals up for a vote at the annual meeting could be made. "This limits and restricts member participation, which is already difficult," Adkins said. "To allow meaningful participation, a mutual company has to be more open than a stock company. This is less open than a stock company." Rule and Adkins are asking for documents concerning the board's deliberations leading up to the proposed changes. In a letter to Adkins last week, MassMutual Assistant General Counsel Scott Lashway contends that Rule does not have a right to the documents she's asked for and says the proposed changes to the bylaws would allow greater board efficiency, flexibility to respond to urgent business and to promote experienced board members. Still, in the letter he offers to allow Rule to see the documents "at a mutually convenient place." In a prepared statement provided to the BBJ, MassMutual reiterated those points. Lashway also takes a shot at Rule and Adkins, who he says have histories of agitation. "Ms. Rule has previously brought a baseless, purported class action lawsuit against the company and you and your law firm are currently attempting to prosecute another such suit," Lashway says. "Books and records requests may not be utilized for improper purposes such as facilitating baseless lawsuits." In addition to its insurance businesses, MassMutual operates several financial services subsidiaries, including Oppenheimer Funds and Babson Capital. The company finished 2013 with $639 billion in assets under management. In 2004, then-CEO Robert O'Connell was embroiled in controversy amid allegations that he inflated the value of a "shadow" retirement account, took part in improper real estate transactions, singled out opposing executives for retribution, hired friends and family and had affairs with female executives. Kevin O'Connell of law firm Posternak Blankstein & Lund reviewed MassMutual's proxy statement for the BBJ and said he didn't find anything "overly obnoxious." "You're more a customer than an owner," O'Connell said of membership in a mutual company. "The value isn't in your shares, it's in the life insurance contract, or your annuity. You have the right to elect a board, and a right to dividends, but you don't really buy mutual company policies to vote on things."