Good morning. Royal Bank of Canada’s (RBC) recent firing of its longtime CFO Nadine Ahn and her lawsuit against the bank is putting personal office relationships, whether romantic or platonic, in the spotlight. Now, in a counterclaim, RBC has released more details in connection to allegations against Ahn.
An RBC veteran, Ahn, who had been with the bank for about 25 years, was promoted to the role of CFO in 2021. The bank said in a press release in April that she was in an “undisclosed close personal relationship” with another employee—a violation of the firm’s code of conduct, and the relationship “led to preferential treatment of the employee including promotion and compensation increases,” according to RBC.
Both Ahn and Ken Mason, the bank’s vice president of capital and term funding, who was the other accused person, were terminated. Ahn, along with Mason, subsequently filed separate lawsuits against RBC. Ahn is suing for about $36 million in pay and damages. They said the RBC press release announcing Ahn’s dismissal falsely insinuated that they were having an extramarital affair. A “longstanding friendship and professional working relationship was mischaracterized by the anonymous accuser and by RBC,” Mason’s lawsuit says, according to Bloomberg. Ahn claims her termination resulted in “palpable reputational harm.”
RBC filed a statement of defense and counterclaim on Aug. 16, according to reports. I obtained a copy from the Ontario Superior Court of Justice. RBC policies required Ahn to “disclose close personal relationships, including close friendships and romantic or intimate relationships, where such a relationship may have or could be perceived to have the ability to impact compensation, work, or promotion prospects,” the claim states. Attorneys for Ahn or Mason have not publicly responded to RBC’s counterclaim.
“Ms. Ahn was a highly respected member of the executive team and a senior leader with fiduciary responsibilities,” RBC spokesperson Gillian McArdle told me in an email. “We supported her career growth and had great confidence in her abilities.” But the bank was “disappointed to learn the allegations were true,” McArdle said.
In March, RBC received an anonymous whistle-blower complaint that Ahn and Mason were allegedly seen “hugging and kissing and exiting the elevators at the Fairmont Royal York hotel in downtown Toronto,” according to RBC’s counterclaim. And the complainant questioned why Mason had recently been promoted to an executive level “given his limited people management experience and the very narrow mandate of his previous role,” according to the document. RBC conducted an internal review directed by its chief human resources officer and chief legal officer and engaged external legal counsel to investigate.
The investigation showed there was an “undisclosed close personal relationship and that Ms. Ahn misused her authority as CFO to directly benefit Mr. Mason,” McArdle said.
Ahn and Mason developed “a close personal relationship, within the meaning of the RBC code of conduct” in 2013 or earlier and continued through to the termination of their employment, according to RBC. Among the allegations in RBC’s counterclaim is that Mason and Ahn continued to meet regularly for drinks, arranged by calendar invites. The counterclaim says those invites, which Ahn referred to as “liquidity updates” or “liquidity meetings,” used coded language to describe meeting alone for drinks, and added they had pet names for each other—“Prickly Pear” for Ahn and “KD” for Mason, according to the filing.
Ahn and Mason engaged in communications through text messages via their personal cell phones, some of which Ahn copied into her work email and sent to Mason through RBC’s systems, according to the filing. Among other things, these text messages fantasized about a life together, RBC claims. The bank’s allegations in the counterclaim have not been proven in court.
Relationships at work
Overall, most companies don’t specifically enact policies to limit personal relationships between employees, Jason Walker, cofounder of the consulting firm Thrive HR, recently told me. But if the chief financial officer has “an employment contract with the company, as most do, there is a strong possibility that there is a clause that stipulates that they can’t engage in these types of relationships,” he said.
Regarding romantic relationships in the workplace, the Society for Human Resource Management’s, (SHRM) recent survey of more than 1,000 U.S. workers finds that 64% agreed that their employer should not have a policy that prohibits workplace romances. However, 78% believe companies should provide employees guidelines on handling workplace romances.
“It is still incredibly important that organizations have guidelines and policies in place—not to interfere with the relationships, but to protect employees from favoritism, retaliation, and incidents of sexual harassment,” Johnny C. Taylor, Jr., SHRM president and CEO said in a statement accompanying the report.
The majority of respondents who are currently in a workplace romance say that their relationship has an extremely positive or positive impact on their professional lives—specifically their overall mood at work (85%), for example, according to the report.
Another finding is about a third of respondents have “work spouse” relationships—a close, emotionally intimate but platonic relationship with a co-worker or business associate.
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
Leaderboard
Patrick Keslin was promoted to SVP and CFO of Wabash (NYSE: WNC), one of North America’s largest manufacturers of semi-trailers and liquid transportation systems, effective Sept. 1. He will succeed Mike Pettit, who is transitioning from his current role to the newly created of position of chief growth officer. Keslin has been at Wabash for the past seven years, most recently serving as a VP of finance, and previously spent 15 years at Honeywell.
Yuning Feng was appointed CFO of Yiren Digital (NYSE: YRD), a Chinese fintech company. He will succeed Na Mei, who has resigned for personal reasons and will remain at parent company CreditEase, the company said. Feng comes to Yiren from GEO Innovation Capital, where he was a partner, and previously served as a financial controller at Goldman Sachs and UBS.
Big Deal
The aggregate funding level of pension plans sponsored by S&P 1500 companies decreased by 1% in July to 108%, according to recent estimates from Mercer. The drop was driven by a decline in discount rates and partially offset by gains in equity markets.
“With August off to a bumpy start, we could see further declines in funded status if conditions don’t improve,” said Matt McDaniel, a partner in Mercer’s wealth practice. “Plan sponsors who have put in place robust risk mitigation strategies tend to be weathering this environment better.”
Going deeper
Moving beyond ESG is a new report by Oxford professor Robert G. Eccles in the latest edition of Harvard Business Review. Environmental, social and governance performance has become a punching bag for both sides of the aisle. “It’s time,” Eccles writes, “to take stock of ESG and chart a path forward.”
Overheard
“Gen Z has a strong sense of self-agency. They don’t just accept orders and execute tasks; they question processes and look for more efficient solutions. This innate skepticism can benefit the entire organization, as employees continuously look for ways to improve the way things are done.”
—Aytekin Tank, the founder of online form company Jotform, wrote in a Fortune opinion piece on how his company adjusted to Gen Z joining its workforce.