Two married coworkers carried on a relationship at work for at least 10 years, Royal Bank of Canada claims, with clandestine meetings at cocktail bars, at least one rendezvous at a lavish downtown hotel, and electronic exchanges of poetry and “I love you” texts.
The relationship, which involved chief financial officer Nadine Ahn and finance executive Ken Mason, allegedly culminated with Ahn’s pushing for undeserved promotions and raises for Mason, RBC says. And the bank wants Ahn to pay it back.
RBC claims that Ahn and Mason concocted a plan the couple called “Project Ken.” The cornerstone of the scheme was to get Mason into a vice president role—a promotion that Ahn delivered personally, the company alleges. She gave Mason other pay hikes, with total increases of 70% from the time she was appointed CFO in 2021. All the while, Ahn and Mason were involved romantically, RBC alleged, and Ahn had a duty to disclose that she was conflicted when it came to making decisions about Mason’s roles and pay. RBC alleged that Ahn even fired another employee who was involved romantically with a subordinate when she herself was in a nearly identical situationship that she kept secret. Accordingly, Canada’s largest bank is trying to claw back $830,556 (C1.1 million) it paid Mason plus $2.4 million (C3.3 million) awarded to Ahn.
The case highlights the shifting landscape around how corporate boards trigger clawback policies intended to recover compensation in cases that don’t involve serious financial restatements but instead seek to hold executives accountable for workplace misdeeds that can hurt company reputations.
In a statement, RBC said it relies on the code of conduct to ensure employees can work in an environment free of bias and without abuse of power. “There are no exceptions, even for senior executives, and we are all expected to do the right thing,” a spokesperson told Fortune. “It is important for the organization to stand up for its employees when the policies that protect them are breached.”
Love in an elevator
At RBC, headquartered in two landmark towers in Toronto, allegations about the affair and its fallout have reverberated throughout the bank and its neighbors, an area known as “Canada’s Wall Street.” RBC launched its investigation after a whistleblower complaint in March alleged the duo were “hugging and kissing” while leaving an elevator at the Fairmont Royal York Hotel. Located in downtown Toronto, the hotel is about a 10-minute walk from RBC’s headquarters. The whistleblower also questioned the rationale for a recent promotion granted to Mason, “given his limited people management experience and the very narrow mandate of his previous role,” the suit states.
In response to the whistleblower complaint, RBC hired an outside law firm to handle the internal probe and tapped the company’s chief human resources officer, Kelly Pereira, and chief legal officer Maria Douvas to run point. Investigators found Mason and Ahn were extremely close, the bank alleged. The couple treated Aug. 16, 2013 as their “anniversary,” and met up regularly at a swanky cocktail bar called Canoe that featured panoramic views of downtown and a carefully curated menu of libations. In Sept. 2013, Mason even wrote a poem, “Ode to Cocktails,” in which he called Ahn his “beautiful cocktail girl.” The poem referred to a kiss, “lingering physical contact, and an encounter in an elevator,” according to RBC’s claim.
The two frequently emphasized their love for each other in emails and texts, the bank alleged. Both were married to other people at the time, and the company said they hid their texting habit from spouses. Ahn even explained to Mason, a 57-year-old father of three, how to make sure his notifications didn’t pop up on his locked phone screen. The two had terms of endearment for each other: Ahn called Mason “KD,” and he called Ahn, 53, “Prickly Pear,” alleged RBC.
Last year, Mason ordered a “LoveBook” from LoveBookOnline and crafted a custom 43-page offering to Ahn to mark their 10th anniversary. The bank said the book, which was ordered and sent to Mason’s office at RBC, told the tale of Prickly Pear and KD. It stated: “Prickly Pear and KD lived happily ever after!”
The last meeting RBC claimed to know about was on March 15, 2024, when the two spent hours having drinks at Canoe. Yet weeks later, the company said, Ahn told the investigating lawyer that she and Mason were merely friends who both enjoyed cocktails. She described their talks as “pure work info.” Once confronted with evidence of their “I love you” messages, however, Ahn said Mason was a “close friend” with whom she shared a connection, said RBC in its claim. The company accused her of deliberately misleading the counsel conducting the investigation, and of being dishonest with the company’s investigator.
According to the bank, Ahn violated its code of conduct, because she should have told the company about her relationship with Mason, and she shouldn’t have used her position to financially benefit him, due to the fiduciary duty she owed the bank. RBC fired Ahn on April 5, 2024—her 25th work anniversary at the bank.
The clawback landscape
To date, Ahn appears to be only the second woman to face a clawback attempt since the Securities and Exchange Commission finalized rules governing recoupment of previously awarded pay after a financial restatement or misconduct. If RBC is successful, Ahn would be the first woman to have her compensation dashed under the new regulatory regime. The SEC’s new clawback rules, which apply to RBC because it trades on the NYSE, require companies to adopt policies to recoup excess pay from current and former executives after a financial restatement.
According to data provided to Fortune from analytics firm Esgauge, 16 companies have attempted clawbacks from 19 executives since the start of 2023, the year the SEC’s rule took effect. Seven clawbacks are pending, eight resulted in payback, and two were unsuccessful. (One company has not disclosed the outcome, according to Esgauge.) Accounting expert Olga Usvyatsky analyzed nearly 7,000 financial filings and found two clawbacks followed an accounting restatement.
The largest companies have adopted policies that go beyond what the SEC required and give corporate boards discretion to recoup pay as a result of executive misconduct or behaviors that harm companies’ reputations. That’s mostly due to pressure from large investors like BlackRock and dominant proxy advisory firms Institutional Shareholder Services and Glass Lewis that rank companies for investor clients, said Mike Weiksner, cofounder and chief technology officer of legal intelligence platform DragonGC.
The firm studied clawback policies adopted by the S&P 500 and found just over half, 51.4%, included provisions for breaches of policy or legal requirements. Some 49% included triggers for breach of fiduciary duty or fraud, while 33% included misconduct with reputational or financial harm. Only 20% included triggers for inappropriate conduct, the analysis found.
Similarly, a July report from comp consulting firm FW Cook found 80% of 45 companies with a market cap greater than $10 billion surveyed had an expanded policy that allowed the board to determine whether to claw back pay in cases not involving a financial restatement.
For RBC to rely on a code-of-conduct breach as the trigger to recover paid wages is an elevated standard of governance—but given that Canada has only about half a dozen large banks, compared to dozens in the U.S., the bar is higher, said Richard Leblanc, a strategic governance advisor and professor at York University in Canada.
“Banks are generally regarded as the best-governed corporations in all the country,” said Leblanc. “They set the gold standard of governance.”
Still, Ahn and Mason are fighting RBC over their firings. Both have challenged the company with wrongful termination claims. Ahn, who said the interview with investigators was more like an “ambush,” is seeking compensation and damages of $36 million. In her suit, she claimed the bank mishandled the investigation, fired her in haste, disclosed it to the public, and destroyed her reputation in the process. In his suit, Mason alleges he was underpaid and was in the midst of negotiating a new comp structure at the time he was fired after 26 years at RBC. He’s seeking about $14.8 million in pay and damages.
Mason also claimed that the investigation was biased and accused the company of having an “old boys' club” culture. He alleged that close relationships between two men or two women have never been scrutinized through the lens of the company’s code of conduct.
“RBC has not historically taken issue with numerous well known close same gender friendships between superiors and subordinates,” his suit states. Mason alleged that if he and Ahn were the same gender, the anonymous complaint would never have been made. He also alleged that if he were a woman and Ahn were a man, RBC would have approached the matter radically differently.
Lawyers for Ahn and Mason declined to comment.
