Aon is paying the apparent loser in a CEO-succession competition $8 million in cash as he transitions out of the commercial insurance brokerage.
Michael O'Connor, who stepped down from his role as co-president in February, will act as a "special advisor" to Aon CEO Greg Case through February 2021 and will continue to get his $1 million salary in addition to a $7 million "transition bonus," the company disclosed May 1 in a Securities & Exchange Commission filing.
O'Connor had been Aon's top executive based in Chicago. His fellow co-president, Eric Andersen, who subsequently was named company president in February, is based in New York. Aon's corporate headquarters are in London, but CEO Greg Case continues to have significant ties to the Chicago area, serving on corporate and civic boards.
The separation agreement with O'Connor, finalized on April 29, forbids him from working for any of Aon's primary competitors through February 2021, including New York-based Marsh & McLennan and Chicago-based Arthur J. Gallagher & Co.
News of O'Connor's payout comes as Aon moved last week to cut salaries for 70 percent of its global workforce of 50,000 by 20 percent in order to cope with expected future lost revenue due to the COVID-19 pandemic. Case and other top executives took 50 percent salary cuts as well. Aon employs about 5,000 in the Chicago area, where it was based until moving headquarters to London in 2012 as principally a tax-avoidance maneuver.
Aon so far is the only one of the world's four largest commercial insurance brokerages to cut pay for its workers. Gallagher is laying off about 4 percent of its global workforce of 34,000 but isn't reducing compensation. London-based Willis Towers Watson, which has an agreement to merge with Aon in a deal that won't close until next year, has imposed a wage freeze.
"We are grateful to Mike for his 12 years of service to our firm and appreciate the vital role he played in developing and leading our Aon United growth strategy," an Aon spokesperson said.
The $8 million O'Connor will get as part of his separation agreement is nearly twice the compensation he received in 2019 as co-president, according to the company proxy. O'Connor received salary of $975,000 and stock awards worth $3.2 million. His total compensation, including various other benefits, was $4.3 million.
Vesting of O'Connor's stock awards won't change under the agreement. He had more than $15 million worth of unvested shares as of the end of 2019. About half of those will vest at the end of this year, and the remainder at the end of 2021, according to the proxy.
"Former Aon co-president getting $8 million in separation deal" originally appeared in Crain's Chicago Business.