Mr. Eccleston, seen here in New York on June 5, 2019, left abruptly after TMX investigated allegations he sexually harassed employees during his tenure at Bloomberg LP in the 1990s. The TMX probe 'found no evidence that Mr. Eccleston engaged in sexual harassment or sexual misconduct while employed at TMX.'CARLO ALLEGRI/Reuters
TMX Group Ltd. CEO Lou Eccleston forfeited nearly $9-million in company stock awards when he retired in January, but left the stock exchange operator with roughly $34-million in share-based compensation following a five-year tenure.
Mr. Eccleston left abruptly after TMX investigated allegations he sexually harassed employees during his tenure at Bloomberg LP in the 1990s. The TMX probe “found no evidence that Mr. Eccleston engaged in sexual harassment or sexual misconduct while employed at TMX." The Globe and Mail later reported that TMX employees alleged he bullied colleagues and fostered a toxic work environment at the operator of the Toronto Stock Exchange.
The compensation details of his departure, included in an annual proxy circular to shareholders, were previously undisclosed. TMX revealed that Mr. Eccleston forfeited a “performance stock option grant” from 2017, as well as share awards from 2018 and 2019.
Stock awards have become the bulk of executive pay at most public companies. Companies typically make awards of options, or some form of restricted shares, and the executive must stay in the job for a number of years for the awards to “vest." Once the awards vest, the executive can usually sell the stock on the open market.
Because Mr. Eccleston was 61 when he left the company, he was eligible to retire, rather than resign. TMX’s retiring executives can normally keep all the unvested stock awards they’ve been given.
However, Mr. Eccleston forfeited unvested awards from the company’s restricted-share and performance-share programs when he left. At TMX Group’s share price on his resignation date, the shares were worth roughly $4.7-million.
He also forfeited his 2017 performance stock options, which had already vested. TMX said the performance condition – a sustained increase in TMX’s share price – was met in July, 2018. The 108,814 options he forfeited had a potential profit of $4.1-million in January.
He was able to retain stock awards worth about $34-million on the day he left. He kept about $9-million worth of stock options that had not yet vested, and about $23-million which had. None of the options had any performance conditions. Mr. Eccleston also collected a $2.38-million payout from his 2017 performance-share grant on Jan. 23, the same day as the remaining executives at TMX. His U.S. health benefits continue until July, 2022.
The circular repeats the company statement that it found no evidence of sexual misconduct by Mr. Eccleston, and notes the retirement arrangement “was negotiated," but offers no additional comment on the matter.
Mr. Eccleston no longer has the obligation to disclose his stock sales, and he may already have exercised options or sold shares. Their value will ultimately depend on when he sells them and the price of TMX stock at that time.
TMX said chief financial officer John McKenzie, who is serving as interim chief executive, is receiving an extra $25,000 a month in salary, an extra bonus opportunity equal to the extra salary, and a one-time stock award valued at $750,000.
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David Milstead