National Post (National Edition)
CEO's resignation spurs debate over vaccine queue-jumping
The abrupt resignation of the head of the Canada Pension Plan Investment Board after it was revealed the 54-year-old was vaccinated against COVID-19 in Dubai has sparked a new round of debate over vaccine queue-jumping and non-essential travel by business leaders and government officials during the pandemic.
Mark Machin, who piloted the nearly $476-billion CPP pension fund to an annualized five-year return of 9.7 per cent since taking over the fund in 2016 — most recently through the thick of the pandemic — tendered his resignation, which was accepted by the CPPIB's board of directors, late Thursday.
“We are very disappointed by this troubling situation and we support the swift action taken by the board,” Katherine Cuplinskas, a spokeswoman for Finance minister Chrystia Freeland, said in an emailed statement.
CPPIB operates at arms-length from government, but its board is appointed by the federal finance minister. Freeland spoke to the pension board's chair, Heather Munroe-Blum, on Friday and “made clear that Canadians place their trust in CPPIB and expect it to be held to a higher standard,” Cuplinskas said.
A doctor by training and investment banker by career, Machin told staff in a memo Thursday night that the trip was deeply personal, and that he was still in the UAE with his partner, according to The Canadian Press.
A former pension official said Machin has two daughters, who remained in Asia when the London-born executive's duties pulled him to CPPIB's headquarters in Toronto.
Machin's memo to staff suggests there may have been an unspoken justification for his actions, said two veteran corporate directors, who spoke on condition that they would not be identified.
One director said it could be as simple as not being a full-time Canadian resident, adding that he doesn't think “shaming people” for getting vaccinated reflects well on Canada or its politicians. This is particularly the case, he said, when there are thousands of Canadians spending the winter in the United States “including a number of CEOs and most have been vaccinated.”
The other longtime director, who has served on the board of both public and private organizations, said he didn't think Machin's behaviour was a firing offence, and praised his performance at CPPIB after taking over as CEO on relatively short notice when Mark Wiseman left in 2016.
But Richard Leblanc, professor of governance, law and ethics at York University, said he could not think of a reason that would justify the decision to “jump the line” in Canada where there is no private market and the vaccine is being delivered as a “public good.”
“If there were exceptional circumstances for a particular CEO, then there should be permission from stakeholders, including any regulator or governmental entity for a Crown or quasi-Crown company,” Leblanc said.
“This issue is largely moral leadership, and leading by example.”
A senior government official said the finance minister was unaware of Machin's trip ahead of time and would not expect to be apprised because of the arms-length relationship.
Canada is just beginning to vaccinate the public at large, beginning with those over 80. The country's inoculation program began in long-term care and retirement homes, and hospitals.
A handful of government and corporate officials have been censured for either jumping the queue to get a COVID-19 vaccine, or for engaging in non-essential travel, which has been discouraged by the federal government during the pandemic.
Rod Baker, the 55-year-old chief executive of Great Canadian Gaming, resigned last month after it was revealed that he had chartered a private plane to a remote Yukon community to get vaccinated along with his wife.
Ontario's then-finance minister Rod Phillips, meanwhile, lost his cabinet seat after it was revealed that he had travelled to St. Barts in the Caribbean in December.
And Dr. Tom Stewart, CEO of St. Joseph's Health System and Niagara Health, resigned from Ontario's COVID-19 advisory board after leaving the country over the Christmas holidays for a trip to the Dominican Republic.
Leblanc said a business leader or politician leader might argue that the travel is for personal reasons, not on behalf of the company or the country, but an organization's brand is always associated with its CEO.
“The CPPIB board did the right thing. It acted decisively,” he said, adding that the pension organization's decision to name a new CEO right away would “mitigate reputation risk, and (avoid) disruption and a CEO search.”
John Graham was named Friday as Machin's successor, becoming the third CEO at the investment arm of Canada's largest pension in less than nine years.
Machin had emerged as a bit of a surprise to observers when he got the job in 2016, having only joined the pension manager four years earlier as president of CPPIB's operations in Asia, based in Hong Kong.
He quickly rose through the ranks to lead all CPPIB's international investment activities, and his appointment as CEO made him the first non-Canadian to run the investment organization responsible for the retirement savings of Canadians.
Before joining CPPIB, he worked at Goldman Sachs for more than 20 years, helping establish a capital markets office in Hong Kong office and rising to the position of vice-chairman for Asia (outside Japan), based in Beijing.
Accepting his offer of resignation this week, the CPPIB board issued a statement that lauded Machin's performance, international perspective, and “outstanding leadership” as CEO.