Hydro One and the Province of Ontario have entered into an agreement that will see the orderly resignation and replacement of the company’s board of directors and the retirement of its company’s CEO. While the Province is only a 47% shareholder of Hydro One, it has the ability to remove the utility’s entire board of directors under the terms of a governance agreement dated November 25, 2015. Hydro One’s current fourteen-member board of directors will be replaced by a ten-member board of directors, four appointed by the Province and six appointed by an ad hoc Nominating Committee made up of representatives of the utility’s largest shareholders other than the Province, by August 15th. The new board will serve until Hydro One's AGM in 2019.
Hydro One’s CEO chose to take the high road and agreed to “retire” and accept a $400,000 lump sum payout rather than be forced out and fight for the more than $10.7m he is entitled to under the terms of his employment contract, although it is believed he will retain the restricted shares he earned while in the CEO role.
Here are the highlights of the agreement between Hydro One and the Province:
- Consistent in principle with the ability of the Province to remove the entire board of directors pursuant to the Governance Agreement dated as of November 5, 2015, each of the current directors of Hydro One will resign and be replaced by nominees identified as set out below.
- The new board of directors will initially consist of 10 members. Consistent with the Governance Agreement, the Province will nominate four replacement directors and the remaining six nominees will be identified through an Ad Hoc Nominating Committee comprised of representatives of Hydro One's largest shareholders other than the Province.
- The new board of directors will be responsible for appointing a new chief executive officer who will also be appointed as the eleventh member of the replacement board of directors.
- Hydro One has agreed to consult with the Province in respect of future matters of executive compensation.
- The replacement directors will serve until Hydro One's next annual meeting or until they otherwise cease to hold office.
- Paul Dobson, Hydro One's chief financial officer, has been appointed as acting chief executive officer until such time as the replacement board of directors, once constituted, can appoint a new chief executive officer.
More details are available at the following link: