Monday, March 10, 2014
James F. Orr
James F. Orr, widely credited with building Unum Corp. into a multibillion-dollar disability insurance company, this week moved onto center stage in the controversy surrounding the American International Group retention bonuses.
The leaders of several big union and public pension funds that own AIG stock called on AIG's three government-appointed trustees to remove Orr, a company director and chairman of the directors' executive compensation committee. The pension funds blamed Orr for authorizing $165 million in bonuses for the AIG executives who the funds contend are responsible for losses so massive that the company had to be bailed out by the government.
''He is definitely in the hot seat,'' said Paul Hodgson, senior researcher for The Corporate Library, a Portland firm that researches corporate governance data.
Orr was the longtime chief executive officer of Unum when the insurer was based in Portland, reigning over the company during its glory days in the 1980s and 1990s.
During his time in Maine, he was considered one of the state's most powerful executives -- jobs at the company were in high demand, and Unum made major contributions to the Greater Portland philanthropic and cultural scene.
Orr was CEO when Unum merged with the Provident Companies in 1999. The combined company is now called the Unum Group, headquartered in Chattanooga, Tenn. It employs 10,000 people worldwide, 3,000 in the Portland area.
At AIG, Orr was chairman of the executive committee when it approved the AIG executive compensation and retention plans that resulted in the controversial bonuses. The committee approves compensation of senior executives and recommends the compensation programs for senior executives and other employees, according to its charter.
He was the only company director named in a letter sent Tuesday to U.S. government trustees Jill Considine, Chester Feldberg and Douglas Foshee by the Employees Pension Plan of the American Federation of State, County and Municipal Employees; the Connecticut Retirement Plans and Trust Funds; and the American Federation and Congress of Industrial Organizations Reserve Fund. The trustees hold voting rights to the federal government's 78 percent stake in AIG.
Citing the public outrage generated by the bonuses, the three groups wrote, ''The Committee and its long-serving member James Orr III are responsible for the payments and arrangement.''
AIG did not respond to a request for an interview with Orr.
Orr presided over Unum from 1987 to 1999, resigning shortly after it merged with the Provident Companies. Orr walked away with a $20 million severance package just as the newly merged company, UnumProvident, began to lose money in 1999 and its corporate headquarters was moved to Tennessee.
Orr is not the only person with Maine ties to serve as an AIG director. Former Defense Secretary William S. Cohen briefly served as a director from 2004 to 2006, prior to the period when the bonuses in question were approved.
Today, Orr has few if any remaining ties to Maine. He retired as a Bates College trustee in 2005 and sold his Falmouth home years ago. He is chairman of the Rockefeller Foundation board of trustees, and president and chief executive officer of LandingPoint investment firm in Boston. He lives in Massachusetts.
Still, Orr is well-remembered in Maine's business circles, where opinion was divided over whether he deserves all the blame for the AIG bonus scandal.
Brad McCurtain, president of Maine Securities, a Portland brokerage firm that specializes in Maine publicly traded companies, said Orr needs to go.
He said corporate boards are run by old boys' clubs that are out of touch with American shareholders. It's time for shareholders to push for control of other corporate directors, he said.
''As much as I respect Jim Orr, he is as much of that old boys' club as anyone,'' McCurtain said.
However, shareholder activist Robert Monks, a corporate governance expert and author and co-founder of The Corporate Library, said Orr is unfairly being singled out, when the real problem is American corporate culture.
''I am usually at the head of the lynch mob, but I think he just happens to be in the wrong place at the wrong time,'' said Monks, who remembers Orr from his days in Maine as a smart and talented executive.
''He is an able guy. He is not a crook at all,'' Monks said.
Orr is up for re-election at the AIG annual shareholders meeting next month.
Staff Writer Beth Quimby can be contacted at 791-6363 or at: