Ontario Pension Plan Faces Turmoil Over CEO Payout and Workplace Relationship
Recent developments at the CAAT Pension Plan, a $23 billion Ontario pension fund, have prompted a governance crisis. Concerns have been raised about the approval of a significant payout to the CEO, Derek Dobson. This situation has led to the suspension of the board chair, Don Smith, and the departure of three senior executives.
Governance Crisis at CAAT Pension Plan
CAAT, a multiemployer pension plan that supports Ontario’s colleges and over 800 public-sector and private employers, encompasses around 125,000 members. Its board faced scrutiny due to two main issues: a $1.6 million vacation payout to CEO Derek Dobson and a workplace relationship between Dobson and another employee.
Suspension of Board Chair
- Board chair Don Smith was suspended by the Ontario Public Service Employees Union (OPSEU).
- This decision followed the unexpected resignation of three key executives in January 2023.
OPSEU, which appoints nine trustees to the CAAT board, confirmed Smith’s suspension pending an internal investigation. CAAT spokesperson Stephen Hewitt noted that Smith remains a trustee but is currently suspended as a nominee from OPSEU.
Executive Departures
The crisis escalated on January 19, when chief investment officer Asif Haque, chief financial officer Mike Dawson, and chief pension officer Evan Howard left CAAT. They reportedly expressed concerns regarding Dobson’s leadership and the recent governance decisions.
- Executives stated they lost faith in Dobson’s ability to lead.
- Despite their departure, the board expressed confidence in Dobson’s leadership.
Controversial CEO Payout
Dobson’s $1.6 million vacation payout was approved by the board as compensation for unused vacation time. Questions arose regarding the appropriateness of such a substantial payment, especially as it is the third of its kind for Dobson. CAAT’s board has indicated an awareness of these concerns and has commissioned an independent governance review set for 2025.
Workplace Relationship and Governance Issues
Dobson’s consensual relationship with a CAAT employee has also raised eyebrows. Although the relationship was disclosed to the board in November 2022 and external legal counsel reviewed it, there are ongoing concerns within the organization about potential conflicts of interest. To address these concerns, measures have been implemented to prevent Dobson from influencing performance evaluations or compensation decisions related to the employee.
Regulatory Oversight
The Financial Services Regulatory Authority of Ontario is reviewing the governance practices at CAAT in light of these events. The authority emphasized promoting good administration within pension plans while refraining from commenting on specific cases.
Conclusion
CAAT remains financially healthy, with a funding ratio of 124%. However, the internal upheaval regarding executive pay and relationships has cast doubt on its governance. As the investigation unfolds, the organization must address these issues to maintain stakeholder confidence.
