Louis Vachon to donate $1 million to charity
Montreal, 26 February 2009 -
The Board of Directors of National Bank and Louis Vachon, the Bank’s President and Chief Executive Officer, have come to an agreement on how Mr. Vachon should dispose of his $2.5 million personal investment placed in trust in 2007 while the asset-backed commercial paper (ABCP) issue was being worked out. The announcement was made today as the Bank released its quarterly financial results.
Mr. Vachon will recover the money held in trust for him and make a $1 million charitable donation, representing the percentage by which the Bank wrote down its ABCP holdings (40%). Mr. Vachon will donate this million to various charities and not-for-profit organizations.
In August 2007, the Bank was the first to take the initiative of acquiring all the ABCP held by its individual retail clients, which amounted to approximately $2.1 billion. As part of this transaction, National Bank purchased all the ABCP held by its individual clients, either directly or through the public mutual funds and pooled funds of its subsidiaries, at 100% of the acquisition cost plus accrued interest. Moreover, the Bank decided that its corporate clients with $2 million or less in ABCP acquired from the Bank should also benefit from this transaction.
A Board committee comprised of independent directors decided that Bank officers holding ABCP should be included in the transaction to purchase ABCP held by individual retail clients. The committee concluded that they, too, were clients who had entrusted their savings to National Bank and that they could not be treated differently from other retail clients and penalized for having done business with their bank.
However, on the recommendation of the Independent Committee, the Board had arranged at the time for Mr. Vachon and two other Bank officers to have an amount equal to the value of their personal investment in the purchased ABCP placed in trust. The objective was to free these officers of any perceived conflict of interest when they were being called on to play an active and strategic role in repurchasing the ABCP.
The ABCP restructuring was completed in January 2009. Moreover, the Bank today announced that it had adjusted the write-down taken on its ABCP holdings to 40%. The Board of Directors has therefore agreed to Mr. Vachon recovering his personal investment of $2.5 million, $1 million of which he will donate to various charities.
Mr. André Caillé, Chair of the Conduct Review and Corporate Governance Committee and Chair of the Independent Committee, emphasized that Mr. Vachon was not legally or financially bound to part with this sum of money. A similar agreement was reached with the Executive Vice-President – Financial Markets and Co-President and Co-Chief Executive Officer of National Bank Financial, Mr. Ricardo Pascoe, who held $76,893. The third officer left the Bank in January 2008 and was refunded.
About National Bank of Canada
National Bank of Canada, which is celebrating its 150th anniversary in 2009, is an integrated group which provides comprehensive financial services to consumers, small and medium-sized enterprises and large corporations in its core market, while offering specialized services to its clients elsewhere in the world. The National Bank offers a full array of banking services, including retail, corporate and investment banking. It is an active player on international capital markets and, through its subsidiaries, is involved in securities brokerage, insurance and wealth management as well as mutual fund and retirement plan management. National Bank has close to $137 billion in assets and, together with its subsidiaries, employs 17,199 people. The Bank’s securities are listed on the Toronto Stock Exchange (NA:TSX). For more information, visit the Bank’s website at www.nbc.ca.
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