MONTREAL – Embattled engineering giant SNC-Lavalin’s efforts to turn the page on its troubled past is moving from the executive suite to the boardroom.
After hiring a series of new executives in the past year, including a CEO and chief financial officer, the company says one-third of its directors including chairman Gwyn Morgan won’t stand for re-election at its annual meeting next month.
Including three new directors who will be elected at the meeting and three others directors who joined last year, half of the new 12-member board will have arrived since the company’s reputation has been rocked by an internal investigation that uncovered $56 million in questionable payments.
In a letter to shareholders included in a regulatory filing, Morgan called 2012 a year of significant change for the company in which the board has been focused on rebuilding its momentum and leadership team.
“Throughout this process, the board aimed to reinforce the corporation’s commitment to integrity, and to regain trust among shareholders and the broader stakeholder community,” he wrote.
SNC-Lavalin’s profits dropped 18 per cent in 2012 to $309 million and its share price declined 21 per cent, before partially recovering to reach $41.90 in Thursday trading on the Toronto Stock Exchange.
During Morgan’s tenure as chairman, the company called in police and the internal investigation led to the resignation of former chief executive Pierre Duhaime, who was nonetheless paid about $1.5 million during the year.
Duhaime was CEO until March 25, but remained on the payroll until June 27 and continued to receive payments until Dec. 12. He was arrested in November and charged along with another former executive with fraud, stemming from a contract involving the building of the multibillion-dollar McGill University Health Centre in Montreal.
Duhaime’s $1.7 million total compensation included $511,815 in salary, a $207,000 pension value and $870,000 in other compensation. He was awarded a $5-million severance package, but the board later suspended some of the payments until facts surrounding Duhaime are clarified or resolved.
The new SNC chairman is expected to be Ian Bourne, 65, a former TransAlta executive who has been on the board since 2009 and was its interim CEO briefly after Duhaime left.
Three other directors in addition to Morgan — David Goldman, Pierre Lessard and Edythe Marcoux — will depart the board and be replaced at the annual shareholder’s meeting on May 2.
The new directors nominees are former Alcan CEO Jacques Bougie; Lise Lachapelle, a former CEO of the Forest Products Association of Canada; and Alain Rheaume, co-founder of private investment firm Trio Capital Inc.
They join CEO Robert Card, Eric Siegel and Dubai oil executive Chakib Sbiti were joined the board last year.
Meanwhile, SNC said Card, who officially joined the company in October, earned total compensation last year of $6.4 million, including $5.9 million in share-based awards, most of which was compensation for the resignation from his prior employer.