Achi news desk-
Royal Bank of Canada’s RY-T decision to terminate Nadine Ahn will cost the bank’s former chief financial officer millions of dollars.
RBC said on Friday that it had terminated Ms. Ahn was effective immediately after an internal investigation “found evidence that Ms. Ahn, contrary to the RBC Code of Conduct, in an undisclosed intimate personal relationship with another employee that resulted in favorable treatment of the employee. including promotion and increases in compensation.”
RBC did not say that Ms. Ahn was terminated “with cause.” The company’s proxy circular describes “cause” as “due to misconduct, gross negligence or willful breach of obligations.”
In an emailed response to The Globe and Mail’s questions, RBC spokeswoman Gillian McArdle declined to say specifically whether RBC had terminated Ms. our Code of Conduct.” He also referred to the language in the company’s proxy circular.
The difference between “with cause” and “without cause” makes a difference. In the proxy, says RBC, if Ms. If Ahn – or any other executive – is terminated for cause, they will receive no cash severance, and lose their bonus opportunity and other elements of a traditional severance package. More importantly, executives who are terminated with cause forfeit all performance share awards and unvested stock options granted to them as part of their compensation.
If Ms. Ahn’s termination is “without cause,” however, she would be eligible for a cash severance that RBC estimated was worth $2.56-million as of Oct. 31, 2023, the end of the last fiscal year. And awards given to an executive terminated without cause continue to vest on their original schedules for two years or more, depending on the type of award.
The Globe reviewed RBC’s proxy circular and subsequent stock transactions by Ms. Ahn recorded in the system to track company insider activity.
As of Friday, Ms. Ahn held 32,575 of what RBC calls performance deferred share units (PDSUs), all unvested. At RBC’s Friday closing price of $139.11, the underlying shares were worth $4.53-million on the open market.
Ms. Ahn also had 75,472 stock options with a potential profit of $1.02-million. But vested options, which Ms. Ahn can keep, represented just $179,375 of the proceeds. Options with $839,828 in potential profit were unvested and subject to forfeiture for termination with cause.
These numbers reflect RBC stock awarded to Ms. Ahn since the completion of the fiscal year on October 31, 2023. On December 13, RBC granted her 15,754 PDSUs; the underlying shares were worth $2.19-million on the open market at Friday’s close.
RBC valued Ms.’s total compensation. Ahn in 2023 at just under $4.2-million, including a salary of $641,644, a bonus of $963,625 and stock and option awards worth $2.46-million.
In fiscal 2021, when he served as senior vice president, wholesale finance and investor relations, his total compensation was $1.62-million.
The termination of Ms. Ahn turned down what could have been years of multimillion-dollar pay, as RBC began positioning her as a potential successor to chief executive officer Dave McKay. Mr McKay, who will reach his 10th anniversary in the CEO seat on August 1, made $16.13 million in 2023.
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