You will remember the crisis that hit the Laurentian Bank last fall. A computer problem had paralyzed the institution’s services for days. Customers experienced a lot of inconvenience and even more worry.
A computer misfortune can happen to anyone. But quickly at Laurentian, we discovered a major management problem. Communication with the public, internal directives, everything seemed chaotic. Even from the outside, you could sense that there was no longer a pilot on the plane.
So much so that at the end of the week, the Board of Directors took a drastic action: they fired the CEO. On Monday morning, a new boss was appointed. Things seem to have returned to normal since then, despite some problems to repair.
Severance pay
Why am I talking to you about this again today? So imagine that the ex-CEO is now demanding his full severance pay. According to what is circulating, based on bank documents, Rania Llewellyn could receive nearly $5 million in severance pay.
A communication to shareholders revealed this week that the current management of the Bank does not agree with the former CEO on the amount to pay him. Let’s read between the lines: Madame probably wants to receive a nice check with her full compensation. However, the conditions provided for in his contract stipulate that this right to compensation expires in the event of dismissal “with valid reason”.
The fallen boss therefore considers that dismissal for inability to manage a crisis when you sit at the top of the pyramid is not a valid reason. Paralyzing communications with the public, hiding oneself in the storm, amplifying the crisis through chaotic internal management, failing to take the rapid and courageous decisions that are necessary, all of this would not justify his dismissal.
I understand that you don’t fire an employee who earns $40,000 annually for an error. We will serve him a warning. However, this charming millionaire must understand that when you are paid $3 million as a signing bonus then a salary of $3.5 million per year, that comes with responsibilities and an obligation to achieve results.
Rigor!
I say bravo to the leaders of the Laurentian Bank who refuse to pay the money. It’s often tempting in the corporate world to buy peace. “Scratch my back, maybe one day I’ll scratch yours.”
In this case, paying the money to buy peace would represent a huge lack of respect for customers. Customers have paid a high price already during this crisis. Rewarding incompetence…no thanks.
Paying these amounts would also represent an insult to shareholders. Thousands of ordinary people hold Laurentian shares in their RRSP, TFSA or otherwise in their savings. The crisis has also cost them dearly.
We demand rigor from a bank. It starts by not paying millions to reward incompetence.