Mr. Stinson, 70, was due to step down from the board at the insurer's annual meeting in May because he has reached the company's mandatory retirement age for directors. But in an unusual move, the board voted last week to seek shareholder approval for an amendment to the company's bylaws, which would essentially enable Mr. Stinson to continue in his current role for one more year.
Sources said the board was reluctant to appoint a new chairman, given the pressure it faces over the crises at Massachusetts Financial Services Co., its Boston-based subsidiary.
MFS has overhauled its management team and implemented a variety of internal policies in the past month after striking a $350-million (U.S.) settlement with regulators over allegations it allowed improper trading in some of its funds. It is still being investigated for directing brokerage commissions to dealers that marketed its funds.
"We're going through some challenging times, and we need a steady hand at the helm," explained Sun Life spokesman Nicholas Thomas, who confirmed the proposed change.
He added that Mr. Stinson has provided strong leadership to the board and has extensive knowledge of the "complex" workings of Sun Life.
However, sources said there was a dearth of available candidates to replace Mr. Stinson. Two other experienced directors -- Sir Bob Reid and John McNeil -- both turned 70 this year and will step down in May. Other qualified directors already have full-time jobs, and would not likely have the time to take on the chairman's duties.
"This might be the worst time to bring rookies on," remarked one person familiar with the matter, who supports making an exception for Mr. Stinson.
Mr. Stinson, who served as chief executive officer of Canadian Pacific Ltd. for more than a decade, joined the board of Sun Life in 1985, and spent four years as lead director before he was appointed non-executive chairman last June.
Sun Life chief executive officer Donald Stewart told The Globe and Mail recently that the decision on whether to retain Mr. Stinson or nominate a new chairman would rest with the board -- not himself or other management directors -- and that he was prepared to work with anyone who was recommended for the job.
The proposed amendment will be outlined in the company's proxy circular and mailed to shareholders in early April. They will be asked to vote on the rule change at the annual meeting.
At last year's gathering, some investors raised questions about succession on the board, and asked why Mr. Stinson was being appointed non-executive chairman when he could serve only one year.
"This is just a personal view, but I would tend to think that when you strike these sort of retirement age numbers you should stick to it," said Bob Bertram, executive vice-president of investments at the Ontario Teachers Pension Plan Board, which held approximately eight million shares in Sun Life as of the end of 2002.
"I think you have to look at the facts of the case and ask yourself whether it's in your interests or not. But there is a flag raised that something out of the ordinary is going on, and you should look at it."