How to manage conspicuous departures
There are good and bad ways of passing the baton of high-level compliance responsibility within a company, and the departures of the chief compliance officers of JPMorgan Chase and Montreal-based SNC-Lavalin demonstrate them. One sounds like best practice; the other sends red flags suggesting the departing officer may not have been entirely convinced of the company's commitment to ethics and compliance.
Cindy Armine at JPMorgan and Andreas Pohlmann at SNC-Lavalin had both been in their positions for barely a year. But that's where any similarity ends. JPMorgan Chase has yet to publish a press release on its website announcing Armine's exodus. The investor community learned of it only through the Wall Street Journal, which got hold of an internal memo and reported the story on February 26. Armine apparently gave no notice she was quitting for another company, leaving the bank's chief administrative officer, Lou Rauchenberger, as interim replacement while JPMorgan searches for a more permanent successor.
By contrast, not only was Pohlmann's departure announced in a press release posted on SNC-Lavalin's website on February 24, but it was also combined with news of his successor's appointment. David Wilkins is joining the Canadian engineering and construction company after leading Dow Chemical's ethics and compliance team for six years. That suggests his recruitment and offer were part of an extended process that SNC-Lavalin undertook.
The company is also giving stakeholders plenty of notice of what will be a gradual transition: the appointment is effective June 1, giving Pohlmann three months to work with Wilkins 'to ensure the continuance of the company's dedication to ethics and compliance excellence', as the press release notes. Nor does it look like Pohlmann is trying to distance himself from SNC-Lavalin; he is moving to a consulting role, focusing on the firm's ongoing World Bank compliance initiatives.
Furthermore, SNC-Lavalin's press release touted 'several positive outcomes' of the first phase of its ethics and compliance program, including approval in February 2014 from Quebec's financial markets regulator for the company to contract with public authorities in the province. JPMorgan, by not taking a proactive stance, missed an opportunity to spin the story in a way that might provide counterpoint to the more than $23 billion paid in settlements to government regulators.
An article published on the Corporate Counsel blog last week offered some insight into the sudden departures of a couple of general counsel that seems relevant to the circumstances around Armine's farewell to JPMorgan. Susan Hackett, CEO of consulting firm Legal Executive Leadership said, 'My first reaction is not to assume that the GC suddenly became a poor performer or couldn't figure out how to maintain a satisfactory relationship with the company's leadership. It's to assume that the GC didn't compromise on the high ground.'
If Armine wasn't simply lured away by more money or better terms, it's conceivable she was frustrated by the bank's practices, and may have worked quietly to improve them. Companies need to be responsive to such efforts if they hope to avoid being caught off-guard by abrupt departures of top officers that may raise questions about their governance programs.