Aon Had Right to Forfeit Benefits Due to Non-compete Agreement Violation

March 23, 2010 ( – A federal court has found that Aon did not abuse its discretion by forfeiting non-qualified deferred compensation plan benefits of a former employee who violated the plan's non-compete agreement.

The U.S. District Court for the Northern District of Illinois rejected Wayne Wignes argument that the fifth amendment to the plan, including the prohibition against competition, is unenforceable because his consent was “neither sought nor obtained” pursuant to Article VII of the plan. Article VII of the plan provides that Aon’s Board of Directors reserves the right to amend the plan, “but without the written consent of each Member as to his benefit hereunder, no such action may reduce or relieve Aon Corporation or any subsidiary of any obligation with respect to any benefit accrued under the [Plan] by such member as of the date of such amendment or termination.”       

However, the court found that at the time Aon adopted the amendment, Wignes was not a member under the plan because he had not yet attained age 50 – a requirement to participate in the plan.   

The Aon Corp. Excess Benefit Plan was an unfunded deferred compensation plan for a select group of management or highly compensated employees. On June 11, 2007, Wignes, who had turned age 50 in 2006, voluntarily terminated his employment with Aon.       

On November 19, 2007, Greg Case, the Chief Executive Officer of Aon, was asked to determine whether Wignes had breached the plan’s prohibition-on-competition provision. Aon received information that Wignes attempted to solicit Aon clients to move to the Jardine Lloyd Thompson Group, PLC and was successful in convincing one client to make such a move.       

Case was told that Wignes had been reminded of obligations under the plan on his last day of employment and three additional times during the following six weeks. Wignes never denied solicitingAon customers after he terminated his employment with Aon.      

Aon denied Wignes benefits under the plan.      

The case is Wignes v. Aon Corp. Excess Benefit Plan, N.D. Ill., No. 08 C 5047, 3/19/10.