After a short, inglorious interregnum, Conservative Party leader Erin O’Toole has been punted pursuant to the Reform Act, which permits a party caucus to remove a leader and elect a new, interim one by a vote without the broader party’s consent. But would he have been fired if he had been the CEO of a public Canadian corporation?
Firing a chief executive has been at least as difficult and requires as much backroom organization as expelling a major party leader. Who has that power? Corporate shareholders, like the party, do but it is impractical to call a shareholders’ meeting to deal with internal management affairs.
The more likely dissidents would be those candidates who lost in their ridings, many blaming O’Toole‘s leadership. But they were not in caucus to vote, just as unsuccessful candidates for board of director positions are in no position to then depose a CEO.
So what happened?
Most MPs are ordinary, previously undistinguished folk coming from positions of average income. Few are like Paul Martin, John Turner or Justin Trudeau with considerable personal fortunes. Many have never had a job in their lives outside of politics and have no real previous accomplishments. In our system, beyond the senior cabinet, few have much power or influence.
More important to them, than their allegiance to O’Toole, is their need to be re-elected to maintain their prominence, prestige and lifestyle — and those much-needed, gold-plated, taxpayer-funded Parliamentary pensions.
They obviously decided that O’Toole, who lost winnable seats to a weakened Trudeau in the last election, was not a good bet going forward against a potentially resurgent Trudeau or, if he did not rebound, a Mark Carney or other candidate without Trudeau’s baggage.
Generally, a board member’s best bet for a continuing directorship is the CEO they already have unless they can personally select a new one who will, in turn, be beholden to them. But, like the weakened O’Toole, no director would consider such a coup unless the CEO appeared fairly flawed, was unable to move the company forward or had a history of underperformance. We have seen such director battles but they are as infrequent as federal leadership putsches.
There were two major analogies to O’Toole’s plight which would cause a board to depose a CEO.
The first was his failure to obtain currency with the Canadian electorate, putting the party in a position of weakness heading into the next election. That would be analogous to discharging a CEO who is falling behind the competition and doesn’t have a viable plan to turn things around. I see that in my practise.
The second is more interesting and speaks to a central theme recently in corporate governance in Canadian corporations — transparency and integrity.
In his first attempt to be leader, Erin O’Toole ran as a Red Tory. In his second attempt against Peter MacKay, however, he allied with the former western Reform Party members, the Christian right and the hard-core social conservatives, garnering support from Leslyn Lewis, Derek Sloan and many former Andrew Scheer supporters against the purportedly Red Tory MacKay. But once in power, he turned on many of these erstwhile supporters and his policies changed dramatically: he supported carbon taxes and took positions indistinguishable from those of much more left-wing Liberals. He also showed disloyalty, firing Sloan and demoting Lewis to the distant back bench. He did not survive.
No CEO could survive that type of conduct, either. Opportunism, lack of transparency and throwing your former supporters overboard is anathema to the current values of Canadian corporations, at which integrity and transparency are the brands everyone aspires to. If you are seen, as a CEO, to not have those values, your days will be as darkened as Mr. O’Toole’s. And boards, in these days of corporate governance where the fiduciary duties to their companies is in the spotlight, cannot afford to allow such CEOs to remain in place.
When the head of our biggest pension fund resigns because of being vaccinated abroad and CNN chief Jeff Zucker resigns for not reporting a consensual relationship promptly enough, despite it being well-known internally, it becomes clear that board members can no longer afford to be tolerant of peccadillos of any kind from senior leaders. They certainly cannot permit a CEO who appears disingenuous and even deceitful to remain in position. I foresee CEO discharges now becoming far more common and less arduous than, say, those of party leaders.