Canadian Imperial Bank of Commerce shareholders' meeting Thursday marks the end of the tenure of one of the bank's more controversial directors.
Leslie Rahl is not standing for re-election after eight years on the CIBC board. Ms. Rahl drew the attention of governance activists and shareholder-advisory firms for her service on the board of the U.S. Federal National Mortgage Association, better known as Fannie Mae, as it collapsed in that country's housing crisis. Ms. Rahl served on several of the company's committees, including compliance and "risk policy and capital."
It was a natural fit for Ms. Rahl, who spent 20 years at Citibank, rising to the bank's co-head of derivatives for North America, before striking out on her own in 1991 with her own risk management firm. Indeed, it could have been seen as quite the coup when CIBC signed her up in 2007, as it was her only other public-company directorship outside of Fannie Mae.
It looked different by 2008, however, as Fannie Mae tumbled into conservatorship and Ms. Rahl resigned from the company's board. Ms. Rahl's remaining public-company engagement was CIBC, where she sat on the board's risk-management committee.
Shareholder unhappiness can be marked by the annual shareholder voting for CIBC's directors. The elections only allow shareholders to "withhold" votes for directors, as opposed to voting "no." And Ms. Rahl, starting in 2010, has had the highest number of votes withheld of any CIBC director.
In 2010, Ms. Rahl had nearly 6 per cent of votes withheld in a year of relatively high shareholder support for the CIBC board (most other directors had 2 per cent or less withheld.) Since then, Ms. Rahl has had withholding rates of 20.76 per cent, 16.50 per cent, 19.20 per cent and 14.91 per cent in 2011 through 2014, respectively. Last year, the average director withholding rate was 3.26 per cent.
Some of the shareholders withholding votes from Ms. Rahl were taking cues from various shareholder-rights groups or proxy-advisory services. Advisory firm Glass Lewis & Co. recommended shareholders withhold votes from Ms. Rahl each year from 2010 to 2014. In its 2013 CIBC report, Glass Lewis recommended withholding votes "given the significant lack of oversight provided by Ms. Rahl during her tenure at Fannie Mae, particularly in the area of risk management." Continued Glass Lewis: "We question her continued service on the [CIBC] board, especially in light of her position on the risk management committee and the industry in which the company operates."
Ms. Rahl's presence on the CIBC board was also one of the key proxy votes identified by the Canadian Shareholder Association for Research & Education, or SHARE, which recommended last year that CIBC shareholders withhold their votes for Ms. Rahl. SHARE said the failure of Fannie Mae's directors "was serious enough to consider Ms. Rahl unqualified to serve as a corporate director."
An email sent to Ms. Rahl's consulting firm Tuesday was not returned. In an emailed statement, CIBC board chair Charles Sirois thanked Ms. Rahl for her service and said, "As a member of our Risk Management Committee since joining the board in 2007, Leslie has made a valuable contribution with her solid expertise in risk management, finance, regulatory compliance and risk governance. We all wish her well in her future endeavors."