OPSEU Pension Trust CEO to exit

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The OPSEU Pension Trust is facing more leadership disruption with the pending departure of chief executive officer Bill Hatanaka.

The pension fund, which manages $16-billion of assets for 84,000 current and former Ontario government employees in the OPSEU union, said Mr. Hatanaka, 60, is planning to depart Sept. 30, less than two years after he was appointed CEO in November, 2012.

He was hired to replace former OP Trust CEO Stephen Griggs, who was fired in April, 2012, and subsequently filed a blistering wrongful dismissal lawsuit that alleged he was terminated for trying to rein in "lavish" spending in the private equity group at the pension plan. His suit was met with a counterclaim that Mr. Griggs was fired for incompetent management. The two sides later settled the lawsuit on undisclosed terms.

Mr. Hatanaka said OP Trust has stabilized internally over the 18 months since he became CEO, so he decided it was time to move on to new business challenges.

"In the 18 months we have resolved many of the issues that were holding us back," he said in an interview Monday. "We've undergone an extremely successful end-to-end transformation... Given what I considered to be very real and sustainable progress, I signalled to the board that I thought this was an ideal time to commence a search for a new long-term CEO."

He said when he joined OP Trust, he wanted to bring stability to the organization and then assess his plans. Mr. Hatanaka said he is not planning to retire, but hasn't decided yet what he will do next.

"I'm not the retiring type – I search for challenges and interesting opportunities," he said.

This CEO transition is markedly less acrimonious than the last one, with OP Trust chair Scott Campbell saying Mr. Hatanaka has "established a strong foundation" for the pension plan's future. The pension plan had a slight surplus as of Dec. 31, with assets equal to 101 per cent of estimated pension requirements.

"Bill Hatanaka has been an exemplary leader for OP Trust who successfully piloted the organization through a critical period of transformative change," Mr. Campbell said in a statement.

He said Mr. Hatanaka has developed a new strategic plan for OP Trust, focused on long-term sustainability. The fund earned a return of 11.7 per cent last year, which was on par with returns at many other large public sector pension plans.

Mr. Hatanaka said he will work with the board over the next five months to help select his successor. He said the board will look both at both external and internal candidates.

After Mr. Griggs left in 2012, the Ontario government ordered an audit of OP Trust as one of the pension plan's co-sponsors. The audit report, released last year, raised concerns about pay levels, undocumented employee expenses and bonuses at the private markets group, known as PMG. It offered 18 recommendations to improve board governance and internal practices at the fund, all of which OP Trust said were either already implemented or would be done.

The audit report said pay in the private markets group was being benchmarked to U.S. comparators such as Merrill Lynch and Goldman Sachs, rather than to Canadian pension plans or other domestic peers, concluding "the current compensation design for PMG may not be appropriate." The board's response, which was included in the audit report, said compensation had been set "using relevant peer comparators" and noted the fund had a portfolio of international holdings, so it monitored both domestic and international pay benchmarks.

The audit report also said at least four external advisers had been hired to review compensation in the private markets group since it was created in 2007 – with a fifth conducting a review at the time the audit was published – yet there had been no updates to the compensation model since 2008.

With several of the consulting reports apparently leading to little reform, the audit report dryly noted that "costs incurred to engage advisers might outweigh the benefits received from the reviews performed."

Prior to joining OP Trust, Mr. Hatanaka was an executive at Toronto-Dominion Bank, where he was group head of wealth management before being named strategic adviser to CEO Ed Clark.