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Royal Bank of Canada’s RY-T decision to terminate Nadine Ahn will cost the bank’s now-former chief financial officer millions of dollars.

RBC said Friday that it terminated Ms. Ahn effective immediately after an internal investigation “found evidence that, in contravention of the RBC Code of Conduct, Ms. Ahn was in an undisclosed close personal relationship with another employee which led to preferential treatment of the employee including promotion and compensation increases.”

RBC did not say that Ms. Ahn was terminated “with cause.” The company’s proxy circular describes “cause” as “for reason of misconduct, gross negligence or willful breach of obligations.”

In an e-mailed response to The Globe and Mail’s questions, RBC spokesperson Gillian McArdle declined to say explicitly whether or not RBC terminated Ms. Ahn for cause, instead pointing to Friday’s press release “which notes that the termination was due to a contravention of our Code of Conduct.” She also pointed to the language in the company’s proxy circular.

The distinction between “with cause” and “without cause” makes a difference. In the proxy, RBC says that if Ms. Ahn – or any other executive – is terminated for cause, they receive no cash severance, and lose their bonus opportunity and other elements in a traditional severance package. More importantly, executives terminated with cause lose all unvested performance-share and stock-option awards given to them as part of their compensation.

If Ms. Ahn’s termination is “without cause,” however, she’d be eligible for cash severance that RBC estimated was worth $2.56-million on Oct. 31, 2023, the end of the past fiscal year. And awards given to an executive terminated without cause continue to vest on their original schedules for two years or more, depending on the type of award.

The Globe reviewed RBC’s proxy circular and subsequent stock transactions by Ms. Ahn that were recorded in the system to track company insiders’ activity.

As of Friday, Ms. Ahn had 32,575 of what RBC calls performance deferred share units (PDSUs), all unvested. At RBC’s closing price Friday of $139.11, the underlying shares were worth $4.53-million on the open market.

Ms. Ahn also had 75,472 stock options with potential profits of $1.02-million. But vested options, which Ms. Ahn can keep, represented just $179,375 of the profits. Options with $839,828 in potential profits were unvested and subject to forfeiture for a termination with cause.

These numbers reflect stock RBC awarded Ms. Ahn since the completion of the fiscal year on Oct. 31, 2023. On Dec. 13, RBC gave her 15,754 PDSUs; the underlying shares were worth $2.19-million on the open market at Friday’s closing price.

RBC valued Ms. Ahn’s total 2023 compensation at just under $4.2-million, including salary of $641,644, a bonus of $963,625 and stock and option awards valued at $2.46-million.

In fiscal 2021, when she served as senior vice-president, wholesale finance and investor relations, her total compensation was $1.62-million.

Ms. Ahn’s termination derailed what could have been years of multimillion-dollar pay, as RBC had started positioning her as a potential successor to chief executive officer Dave McKay. Mr. McKay, who will reach his 10th anniversary in the CEO seat on Aug. 1, made $16.13-million in 2023.

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