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People walk past CIBC ATMs in Montreal.CHRISTINNE MUSCHI/Reuters

The Globe's annual Board Games project on corporate governance can lead to some surprising discoveries.

When Canadian Imperial Bank of Commerce inquired this week about why it lost marks for its disclosure of CEO Gerry McCaughey's equity holdings, we turned to our intrepid markers at the University of Toronto's Clarkson Centre for Business Ethics & Board Effectiveness. And they explained that the company's last proxy circular actually didn't reveal how many common shares of the bank he owns, better yet their value.

That explains the marks. But then the conversation got interesting, because the Clarkson folks explained they were surprised during the marking this fall to discover Mr. McCaughey now appears to own no common shares of CIBC .

How can that be? Here's the math as we've pieced it together this week.

On Dec. 6, 2010, the bank issued a short release saying Mr. McCaughey had arranged to sell 44,000 of his CIBC common shares and exercise about 500,000 stock options, starting in January, 2011. The sales were to occur "automatically at pre-determined intervals throughout 2011."

"This allows for an orderly, automatic process, avoiding the sale of a large block of shares over a short time period," the release explained.

What the release didn't say was that this would leave Mr. McCaughey holding a total of zero common shares, although he still owns large numbers of share units, which track the value of the company's share price but pay out in cash. (More on that in a moment.)

How did the sales go? According to regulatory filings, he sold 10,000 shares at the beginning of each month from January to April and a final chunk of 4,358 shares at the start of May. Total proceeds from all the share sales, which wrapped up on May 2, were $3.56-million.

Meanwhile, Mr. McCaughey also exercised 200,000 options. Regulatory filing show the option gains from January to April totalled $4.21-million. Proceeds from share and option sales combined were $7.77-million.

The shares sales in the first five months of 2011 were not the first by Mr. McCaughey -- they have been ongoing since the start of 2010.

He owned almost 150,000 common shares at the start of 2010, and sold many of them off in 10,000 share chunks at the beginning of almost each month throughout last year as well, using the same automatic sales process.

The 2010 share sales totalled $7.97-million, while the 2010 option exercises garnered a profit of $2.9-million, regulatory filings show.

That's a grand total of $18.7-million in proceeds in 2010 and 2011, according to filings.

Asked why Mr. McCaughey sold all his common shares, CIBC spokesman Rob McLeod pointed to last December's release pre-announcing his sale plans, which says simply, "Mr. McCaughey is conducting these transactions for personal financial planning purposes."

Mr. McLeod also noted that Mr. McCaughey still holds share units that far exceed his executive share ownership guidelines, and equalled 27 times the value of his base salary as of Oct. 31, 2010.

Share units are compensation granted by the bank that track the underlying value of the bank's common shares and pay out in cash. Many big companies use them as an alternative to outright grants of shares because they do not dilute the outstanding share base and have some attractive tax features.

CIBC's last available proxy circular says Mr. McCaughey held unvested share units worth about $37-million as of Oct. 31, 2010, so he still has substantial equity exposure.

The lion's share of those units are a block of "retirement special incentive program" units worth $25.5-million last year, which Mr. McCaughey must hold until he leaves the bank. The plan was created in 2000 to link executive pay to merchant banking investments like Global Crossing Ltd.

The share units are equity Mr. McCaughey must hold -- he cannot choose to sell them, and he cannot cash most of them out until he retires.

The holdings accomplish the goal of aligning his interests with those of shareholders, which may be all that matters in the end. But the share sales also mean Mr. McCaughey has sold all the equity he is able to sell, and holds only equity that has been granted to him by the bank and which he has no option but to hold.

It also means his ownership pattern is different from that of most other large company CEOs. All the other big bank CEOs, for example, own hundreds of thousands of common shares of their banks, in addition to their share unit holdings.

For financial planning purposes, this may represent a lot eggs in the same basket -- although bank CEOs undoubtedly earn enough to buy a diversity of other investments, too. For public signalling purposes, however, the share ownership marks an overwhelming, voluntary commitment by CEOs to the future of their banks.

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