Jack Kiervin sort of owes former Ontario premier Ernie Eves a favour. As chairman of Prison Fellowship Canada, the venture capitalist held a summer fundraiser entitled “Women Rising” in his home in Oakville, Ont., and some of the neighbours might have been surprised to know what was going on inside. After all, the event featured two speakers who had landed behind bars after run-ins with the Man.
The former inmates mingled with well-heeled females from Bay Street over finger foods and juice cocktails before outlining how life can take unexpected turns. After a nice sit-down lunch, one explained how she used to prey on poor women willing to do anything for a subsidized southern vacation; her life as a drug-mule runner only became distasteful when the competition tipped the cops and she was forced to see her crimes — and two prison stints — through the eyes of her kids. The other ex-con then described losing a good government job after a bloody domestic dispute — in which she lost an eye while taking her partner's life.
The speakers were introduced by Prison Fellowship's executive director, who also went to prison after a run-in with authority. “We couldn't be more happy to have Ellie on board,” Kiervin says.
“Ellie” is Eleanor Clitheroe. And she didn't tell her story at the meeting. Then again, most people think they know it already. But Prison Fellowship's executive director didn't find religion in jail. For the record, she's not a criminal. She was never charged with a crime. The authorities in her tale aren't even cops.
Indeed, Clitheroe's run-in was with then-Ontario Premier Ernie Eves, who, on July 19, 2002, had her terminated with cause from the high-profile CEO job at Hydro One, the province's transmission-grid operator. As you may recall, she was hired to run the controversial privatization of the utility, which would have netted Ontario an estimated $5.5 billion. But Hydro One started generating heat for the province after it paid Clitheroe a compensation package worth about $2.2 million in 2001. The utility also raised some eyebrows by sponsoring sailing competitions, one of Clitheroe's passions.
When the political waters got too hot, Eves promised to cut Clitheroe's pay. Hydro One's board cried foul. Led by former chairman Sir Graham Day, a Halifax native respected around the world for leadership, restructuring and privatization efforts at numerous companies (he's worked with Bank of Nova Scotia, Cadbury Schweppes, British Aerospace, Dome Petroleum and Powergen, among others), Hydro One's directors resigned en masse — after Eves moved to fire them. The government then installed a new board, chaired by Tory operative Glen Wright, who fired Clitheroe using what many call trumped-up charges of breaching her fiduciary duty.
This wasn't a standard executive execution — you know, the kind that comes with a vague explanation like “parting ways to pursue other interests.” It's been called a character assassination. But what really happened to Clitheroe was more like being tarred and feathered, then crucified. The termination announcement was short, but not sweet. It actually listed the alleged wrongdoings. More public outrage followed. One newspaper columnist suggested Clitheroe should follow the example of the Girls of Enron and pose for a Playboy spread dedicated to Canadian greed. Another scribe insisted she wasn't fit to be a mother, let alone a CEO.
That was too much for Clitheroe's dad, who is no longer proud of the country he served as a Royal Canadian Air Force navigator during the Second World War. The 85-year-old thinks he can still recognize defensive flak when he sees it, and he saw it in the way Eves treated his daughter. “My father still can't let it go,” Clitheroe says. “He has this box full of media clips that he keeps in the basement, and he just can't figure out why they describe a person he doesn't know.”
Clitheroe herself has accepted her fate. She knows she'll never regain the reputation that landed her on corporate boards in a range of sectors, including mining (Inco), banking (TD) and steelmaking (Dofasco), not to mention her directorships with the Conference Board of Canada and the Federal Standards Advisory Board, or her role as chancellor of the University of Western Ontario.
But that's OK. She no longer cares about corporate titles or the trappings they provide. She now lives in student housing and works relaxed hours — or relatively relaxed, for a workaholic. Her new boss is reportedly fairly forgiving, and he offers a better long-term retirement plan than the one Hydro One took away. Clitheroe is now an Anglican priest. “When you give up things, the next thing you have to give up is the thought of the things,” she says, citing monk-poet Thomas Merton. And that's what she did.
God has always been part of Clitheroe's life, so after losing her job, she completed a master of divinity degree from Wycliffe College at the University of Toronto, where she is now working toward a doctorate in theological philosophy (learning ancient Greek in order to study Old Testament prisons). As a curate at St. Cuthbert's Church in Oakville, where she is known as “Reverend Ellie,” her job is pastoral and sacramental. She walks “with people on their spiritual journeys as a leader in a parish community,” she says. At Prison Fellowship, which was started by Watergate co-conspirator Charles Colson, she helps people “impacted by crime in as healthy a way as possible.” She has administrative tasks, but she also works in the field — prisons — with inmates and families.
Let's get something straight: Clitheroe isn't seeking redemption for what happened at Hydro One — she's seeking compensation. Before leaving office, Eves enacted legislation preventing her from suing the government. But the courts ruled she could sue Hydro One. Alan Lenczner, Clitheroe's lawyer, is going after her former employer for millions in severance and pension compensation outlined in the contract revoked by Eves. She has also filed a $5-million libel and slander suit against Wright for what he said when she was fired.
Away from the corporate world
On Jan. 29, l954, Eleanor Clitheroe was born of Anglican liturgy and Baptist social activism. Her Anglican father married a Baptist, so she was a Sunday school regular at Garden City Baptist Church in Montreal, and a holiday parishioner at St. Mark's Anglican Church. After her full-immersion baptism at 13, she started carrying a Bible. She took it to camp, and she probably had it when she led a girl scout study of Jesus Christ Superstar.
University years offered new ideas and distractions. “I was not as actively involved in church,” recalls Clitheroe, who still managed to be a regular 8 a.m. attendee at St. George's Anglican while studying common law at the University of Western Ontario in the late '70s. She wanted to be a criminal lawyer who defended the kind of people society doesn't care about. “I had no conception of going into business. It wasn't something I rejected — it was just something that didn't enter my expectations or horizon.” That all changed when a tax professor suggested she would do well in what she considered a man's world. That gave business “the appeal of the mountain I could climb,” to prove that women could belong. “I was still in my early 20s, so the world was pretty much unknown and unexplored.”
After completing a civil law degree at McGill University, Clitheroe returned to Western for an MBA. That led her to CIBC, where she held a variety of jobs, including vice-president of corporate treasury. “I loved my work,” she says, but “I didn't always like what I saw in the business world, whether that was sexual harassment, the difficulties of human relations, the struggle to have ideas heard over the voices of the men.” She also wasn't always sure where some lines should be drawn, which is why she always felt something drawing her away from the corporate world. Turns out it was the sea.
Clitheroe had an awakening while lying in bed recovering from surgery for endometriosis in 1985. She was still with CIBC and married to her first husband, another banker. She didn't know a halyard from a tiller, but a girlfriend gave her a book by Naomi James, a female sailor who circumnavigated the globe single-handed. Before turning the last page, Clitheroe decided to follow in her wake. She started taking lessons at Humber College in the winter. She also started looking for a boat.That's how she met Randy Bell, a boat builder who eventually became her second husband. What was his initial impression? “This is no bimbo,” he recalls thinking, noting his wife wasn't content to start with just the basics. She studied everything from navigation to diesel engine mechanics and fibreglass repair.
Clitheroe found a boat in August 1986. By summer's end, she was teaching sailing as a certified instructor. She took a leave from her job, and set sail on Oct. 3, 1986. She headed for Florida, then hit the Bahamas, followed by Turks and Caicos. On May 12, during her trip back, she made a commitment to change her life. “When I was a teenager,” she says, “I had experienced a personal religious conversion, but while I was sailing I had experienced emotional and psychological conversion. I yearned to do more.”
Clitheroe left CIBC and started studying religion, ethics and law. But after splitting with her first husband, she soon ran out of money, so she started working on a government contract. That eventually led to Ontario's Ministry of Finance, where she became deputy minister — and caught the eye of Maurice Strong. He had been appointed chairman of the old Ontario Hydro by then-Premier Bob Rae, and he tapped Clitheroe to help him try to save a sinking ship as Hydro's chief financial officer.
After the Mike Harris Conservatives split Hydro into two parts as part of its Common Sense Revolution, former Maclean Hunter executive Ron Osborne was put in charge of Ontario Power Generation, and Clitheroe was made CEO of Hydro One. Sir Graham Day had been appointed chairman to eventually take the utility private in a public stock offering. It would have been the largest in Canadian history, not to mention one of the Top 10 in the capitalist world. And he wanted Clitheroe leading the IPO.
The rest, as they say, is history.
After being cut loose by Hydro One, Clitheroe says, “it became clear that my calling, which had been muted by all the activity and noise of my life, was at least something that I should listen to.” Still, divinity school wasn't a given. On the Thanksgiving following her departure from Hydro One, Clitheroe got together with two women she had met in business school. “We were talking about what I was going to do,” she recalls, “and I said that I was looking at either going to veterinarian college or the seminary. I remember them looking at me in astonishment and saying, 'Why would you go to vet school? You would be a wonderful minister.'” It didn't become official, but, she says, “I think I actually made my decision in that instant.”
The decision changed everything. Clitheroe's family — she has two children, Faith and Jacob — sold their home in Toronto's Lawrence Park. “I began Wycliffe in January 2003,” she recalls. “When the married-student apartment became available in February, it seemed perfect. Yet, as we and some friends carried furniture into the apartment, I had moments of thinking that this was someone else's life.”
The drunken sailor
The Clitheroe affair has been called a fall from grace. It wasn't. She was pushed. And it was from a pedestal erected by the politicians and company officials who hired her to privatize Hydro One. “A media campaign,” she says, “was designed to vault me into the public arena, so that I could enhance the price of the shares.” She didn't like it. “But it was only to be a short campaign — six months — and before Ernie Eves pulled the privatization, we were just two weeks away from the IPO. We had begun the investor presentations. So, I thought that the media focus would gradually taper off. That didn't happen.”
How big was her fall? In early May 2002, when anyone who wanted to know what Hydro One was paying its CEO could find it in company filings, Clitheroe was named the top businesswoman in Canada. According to the National Post ranking, she was more impressive than Indigo CEO Heather Reisman, BMO's Sherry Cooper, RBC's Barbara Stymiest, who was head of the Toronto Stock Exchange, and Belinda Stronach when she was CEO of Magna International.
Clitheroe wasn't just considered better than other women in May 2002; media reports insisted she was the busiest corporate boss across the nation and gender lines, one charged with the daunting task of transforming a government-owned utility. In the words of one reporter, “There's no doubt that her varied background makes her a natural to lead the company.”
But the Hydro One IPO was a real political problem for Eves. His predecessor, Harris, had announced the privatization during the dying days of his tenure in late 2001. Consumers were worried. Labour was fighting. And disasters struck. First, a Superior Court of Justice judge ruled that the government didn't even have the legal right to sell the utility. Then taxpayers found out that Clitheroe could walk away from the public offering with a million-dollar pension and three years' pay. Smelling blood, the Liberals and NDP started suggesting that Hydro executives were pushing the IPO for personal gain. The public started seeing it the same way, according to opinion polls. After taking heat, the Conservatives claimed to agree.
On June 4, Ontario Energy and Environment Minister Chris Stockwell called Clitheroe's escape clauses “the straw that broke the camel's back.” He introduced legislation to allow the Eves administration to fire Hydro One's board of directors and roll back salaries and benefits of its senior executives. Conveniently, the bill included a clause that barred Clitheroe or her co-workers from suing the government. Eves boasted: “This bill will not cost the taxpayers of Ontario one red cent.”
Clitheroe resigned her directorship along with the other members of Hydro One's board, which came to be dubbed “Hydro None,” but she refused to depart as CEO. On June 11, 2002, Tory party operative Glen Wright was moved from the Workplace Safety and Insurance Board to chair an interim Hydro One board. It was charged with protecting “the interests” of Ontario. In firing Clitheroe, the interim board left human-resources professionals at a loss for words, by publicly accusing her of spending like a drunken sailor on club memberships, misusing the company credit card and charging the government-owned utility for renovations to her home. After the media got in on the act, the nation's watercoolers were surrounded by talk of company-paid limo rides for Clitheroe's kids and nanny, not to mention the family cat. Hydro One's sponsorship of sailing events was seen an as outrageous expenditure by an out-of-control CEO.
The departed board members tried to support her from the sidelines. “I think that a job has been done on a very competent CEO with tremendous integrity,” said former director Dona Harvey. She tried to get people to understand that the limos in question were actually mostly minivans, and they were offered by the board as a trade-off for untaken maternity leave — Clitheroe had stayed on the job after adopting children. Nevertheless, Clitheroe, who has always insisted that everything she got was approved, soon became, in the public eye, the Miss Piggy of capitalism.
By July 26, the Conservatives started talking about seeking damages. “I don't think it would be appropriate for me to talk about Ms. Clitheroe,” Eves said at the time, “in light of the fact that there is probably going to be an upcoming lawsuit, so I'll just let the lawyers speak for us.”
Western students were now complaining about having a chancellor with “malnourished ethics.” The National Post wondered why Hydro One hired Clitheroe in the first place. Diane Francis billed her own newspaper's pick for top female executive of the year as a waste of money for making $2.2 million, which is about 18% of the average compensation for CEOs of the 350 leading U.S. companies in 2004. Columnist Christie Blatchford concluded Clitheroe was getting off easy because she was a woman. That was wrong, she wrote, because Clitheroe was obviously “just another one of those unintelligible, smooth-talking big-boys in a good suit who was looking out for No. 1.”
When Clitheroe was in charge
Maurice Strong has always been “high” on Bob Rae, and that's why the former head of Power Corp. would like to think the Liberal leadership hopeful wasn't active in the decision by Hydro One's interim board to fire Clitheroe, a former Strong protege herself. After all, the privatization ball that rolled over Clitheroe was put in motion back when Rae was still a card-carrying NDPer, one surprised to be elected as premier of Canada's largest province. Strong first voiced the idea of privatization, and it was Rae who placed the old Ontario Hydro in his hands. “I was the one who lured Clitheroe into Ontario Hydro,” recalls Strong. “I was looking for the best, and I had to convince her. I did it because I had gained immense regard for her while she was in government. I can't believe any of what has been said. She does not have corruption in her bones.”
Strong says Clitheroe was ill-served both by the Hydro One directors who set her compensation and by the ones who, like Rae, sat on the interim board that sent her packing. “When I was in charge,” Strong says, “I took a dollar salary to be in a better position to make tough-minded cost cuts. So I think quickly moving to extravagant pay, at least by public-sector standards, while the system was still in trouble [and government-owned], was wrong.”
But that, Strong adds, was a board decision by Hydro One, which reported compensation levels to the government. And it doesn't change the fact that Clitheroe was a model senior executive. “When I came to Hydro, rates were going through the roof, and it had just lost three-and-a-half billion dollars,” Strong recalls. “When I left a little over three years later, we turned in the biggest profit in our history and rates were level — something the Conservatives took credit for. We didn't solve all the problems, but we bought time. Eleanor was very involved — vital, in fact — in all that. I saw her as future CEO of the whole thing.”
Energy Probe's Tom Adams, who is perhaps the most informed independent critic of Ontario's power system, pretty much agrees with what Strong has to say about Clitheroe — except the bit about her compensation, which doesn't bother him in the least. “I don't begrudge people making top-flight salaries if they're doing top-flight jobs,” Adams says.
Adams could see a future for Hydro One when Clitheroe was in charge and making some bold moves. He says moving to buy municipal utilities, as Hydro One did before Clitheroe was fired, was “a good idea,” even though he says she probably overpaid. He doesn't think expanding into telecom services would have shown results, but “all the utilities were doing it,” and not all failed to make profit. He still thinks Ontario desperately needs the links to grids in Quebec and the United States that Clitheroe was planning to make. Overall, Adams calls Clitheroe's management approach a mixed bag, but it was a creditable strategy designed to create value. “There was no putting herself or her ambitions ahead of her shareholder's interests,” he says.
After all that has happened, Adams says Hydro One probably needs to offer “danger pay” to any CEO ? since the highly politicized system is now in terrible shape. He gives Tom Parkinson, the current CEO, credit for trying to deal with the real scandal, which Adams says is the compensation levels among the utility's unionized rank and file. He also gives Parkinson good marks for upgrading the grid, a task Clitheroe neglected while she was focused on the IPO. Then again, the public offering was part of a solution that Adams says would have placed Ontario in a much stronger energy position today.
From start to finish, he says, the Clitheroe affair has been a gross injustice, one that sends the wrong message to talented people. Adams points out that Ron Osborne, the former CEO of Ontario Power Generation (Hydro One's sister corporation), wasn't dismissed by the Eves government, despite a questionable record and a $2.3-million compensation package. And he wasn't hired to run an IPO.
Furthermore, Adams says, it was the chairman who pushed Clitheroe to look the part of a private-sector CEO in order to market a public offering — “and nobody is in a position to criticize Graham Day's judgment” on how to pretty up the company. After all, Adams says, nobody has “anything like the experience and credibility Day had then and has now on Bay Street and on Wall Street, not to mention in the City of London.”
When it comes to Clitheroe, Adams concludes, someone needs to do “the honourable thing.”
If Eleanor was a man
Sir Graham Day cut ties with Clitheroe as soon as she was ditched by Hydro One. He did it on the advice of his lawyer, but not the kind you might think. “If Eleanor has to go to court,” he says, “I'll most certainly be called as a witness, and the evidence I'd give would be negatively impacted if I maintained a close friendship. Consequently, I have not had contact other than Christmas cards.”
What he'd tell a judge is simple enough: Under his leadership, Day says, Hydro One was determined to retain its executives and to have a successful IPO that would have handed taxpayers billions of dollars. Clitheroe was paid well, but never negotiated her pay package — it was freely offered by Day's board, based on independent assessments of the going rates for CEOs of the type of company he was put in place to create. The infamous severance package, he says, was a standard clause designed specifically for the post-IPO owners, meaning it would never have cost taxpayers a dime. (That, of course, may no longer be true, now that Hydro One remains government-owned and the courts might rule Clitheroe was wrongfully dismissed.)
What about the home renos? Hydro was fixing a residential property, and Clitheroe appears to have simply decided to use contractors vetted by the company to do minor work on her own home. The misfiling of the bill came to light when she went looking for it. She informed the directors and paid everything back. (This version of events matches with Clitheroe's.) As for the sailing race sponsorship, Day says it was discussed with the investment bankers who agreed it was an ideal way to get a new company name out in front of the global investing public. Remember, he says, when he and Clitheroe joined Hydro One it was called Ontario Hydro Services Co; it changed its name for the IPO.
Maybe the Lord knows where Eves was coming from, but Day insists he doesn't. “There were no conversations between us, or between Eleanor and Eves, or the board and Eves, in all the time between when he became premier and the time I left,” Day recalls. Nevertheless, the government was aware of all of the above. “If Eleanor was a man, it might have been different. If she had been ugly, it might have been different. But she is relatively young, attractive, well-groomed, articulate and female, so I have to think the media saw it as, wow, what a juicy story. It saddens me that other women were not prepared to stand up for one of their own.” (An informal Canadian Business survey of woman under Clitheroe on the National Post's 2002 Top 50 turned up none willing to discuss the affair on the record.)
Whatever the reasoning behind her termination, Day concludes: “Clitheroe was screwed. And ratepayers and taxpayers were screwed, and screwed roundly, with her.”
A goldfish in a tea cup
Finding questions in the Hydro One file is a shooting-fish-in-a-barrel sort of task. Scratch that. Access-to-information rules for publicly owned companies make it more like shooting a goldfish in a tea cup.
Answers are harder to find.
Ernie Eves did not return requests for comment; Glen Wright and Chris Stockwell could not be reached. Bob Rae — who was chair of Hydro One's human resources committee when the current CEO negotiated his contract — was easy to find. After all, Rae has been travelling the land, publicly soul-searching pretty much every decision he has ever made as he fights for the leadership of the federal Liberal party. However, when asked if he was willing to share thoughts on why Clitheroe was canned, Rae didn't even offer a “no comment.” He just said, “No.”
Energy Minister Dwight Duncan was unavailable for comment, although his press secretary fielded a few questions. Rita Burak, Hydro One's current chair, took a pass, as did Hydro One's current chief executive, Parkinson. A company spokesperson offered some answers, none of which explained why the Hydro One board that fired Clitheroe now seems comfortable justifying private-sector-style pay and perks by stating that they are board-approved and good for business.
Wright was chairman of Hydro One for a year. Under his watch, it paid $18,591 to a third party to ask Mike Harris for advice on the Ontario energy market. Wright himself charged Hydro One $5,758 for hunting trips with Tory officials. He eventually paid that back while blaming it on Clitheroe, saying he wasn't able to think straight while sorting out the mess that followed her termination.
Burak, a former secretary of cabinet under Harris, signed off on Wright's hunting trip, including $297 for shotgun shells. As the current Hydro One chair, she allows directors to dine out without asking for itemized bills — something the province itself stopped allowing after Clitheroe was canned. And she pays Parkinson more than what Clitheroe offered to stay on for, when her pay became an issue. When Clitheroe was fired, Parkinson's pay was $450,000, plus a short-term incentive of up to 80%. Last year, he took home $1.6 million — one million more than OPG now pays its CEO. This year, he could take home more than $1.7 million, assuming that he receives a similar jump in bonus to previous years.
Now the fun part. After learning about Parkinson's $400,000-plus raise in 2005, Donna Cansfield, who was acting energy minister, reportedly called for a review. But when Duncan returned to the post — he had been seconded to finance after minister Greg Sorbara had temporarily stepped aside — the review, if one was coming, was lost in the shuffle. According to Steve Erwin, Duncan's press secretary, Cansfield simply wanted informal discussions to better inform herself on the compensation issue. “No formal review was ever called,” Erwin now insists. Oddly, it was Erwin who, as a reporter for the Canadian Press — where he worked before joining government — penned the news story that announced Ontario would conduct a review. In it, Cansfield was quoted as saying that opposition calls for an examination of Parkinson's hefty pay were “not unreasonable.”
Duncan, meanwhile, has flip-flopped on the issue. In January 2004, he promised that he would examine spending at Hydro One, which he said the Conservatives had allowed to behave like “big-shot private companies.” In July 2004, the energy minister's office attacked the Conservatives again over golf memberships enjoyed by Hydro One officials. “Our government isn't in the business of supporting these perks,” noted Duncan spokeswoman Vanessa Torrance at the time. She promised it “will be a different story under our watch.”
This brings us to 2005, when expense reports obtained by Canadian Business show that the government-owned utility paid more than $10,000 for Parkinson's visits to Greystone Golf Club, just outside Toronto. Peter Gregg, Hydro One's vice-president of communications, says that taxpayers should note that they technically don't pay for green fees — because Hydro One is now turning a profit. “Parkinson uses the membership to conduct business networking sessions on a regular basis as do many other business leaders in Canada,” Gregg adds. Critics, however, point out that Hydro One is a government-owned utility, not to mention a virtual monopoly, with no public offering in the works, which was the reason behind Clitheroe's numerous club memberships.
Parkinson doesn't use limos to get to the golf course. But he does use company helicopters to travel to and from his northern Ontario cottage. He once tried justifying one airlift by noting that it let him work and look after his kid. Sound familiar?
Ernie Eves was wrong
Ernie Eves turned out to be dead wrong when he boasted the affair wouldn't cost “one red cent.” After all, once Clitheroe was gone, the IPO was dead, and that cost at least $5 billion, while putting the electricity system in limbo. Not many people will feel for the investment bankers involved, but they worked hard on Ontario's behalf and lost hundreds of millions in potential IPO-related fees. If any future government thinks that privatization is a good idea, it will have a hard time convincing the Street to play along.
That means consumers will continue paying surcharges to eliminate the $20-billion-plus debt left over by Ontario Hydro for a long time. Joe Average, meanwhile, lost a once-in-a-lifetime chance to invest in what could have been a great publicly traded company. After all, Ontario residents were supposed to get first crack at Hydro One shares, through an instalment plan that required only 60% upfront.
Eves was also wrong when he promised government lawyers would speak his case by going after Clitheroe. It is the former CEO of Hydro One who is on the offensive. So far, Hydro One's lawyers haven't even filed a defence.
If Reverend Ellie loses her legal battle, her family will still be the only real winner in the affair. After all, she now finds time to walk her kids to school instead of rushing them there in a limo. If she wins, she isn't sure what she'll do with the money. “I have two children to raise,” she says. “But if it is a significant amount, I'd form a discernment committee to assist me in knowing how any award should be best used, and I will listen to the advice of these counsellors.”
She doesn't care if some people still think that she is greedy. As a lawyer, she says that a contract is a contract. As a citizen, she thinks that citizens must fight back when governments go too far. As a priest, she says that being a good Christian requires one “to be humble and obedient, but being humble does not mean being walked on. Walking with humility does not mean not speaking up.”