Sebastian De Montessus, CEO of Endeavour Mining speaks after the inauguration of Ity Gold Mine in western Ivory Coast on May 9, 2019.ISSOUF SANOGO/AFP/Getty Images
Endeavour Mining Corp. EDV-T has fired its chief executive, Sébastien de Montessus, alleging he engaged in “serious misconduct” around an “irregular payment” concerning an M&A transaction.
The company said in a statement on Thursday that the payment Mr. de Montessus allegedly misdirected was US$5.9-million and related to the sale of an asset.
The payment was uncovered in a review by the board of the company’s past mergers and acquisitions transactions. That review is continuing, the company said.
Mr. de Montessus wrote in a statement to The Globe and Mail that in 2021 he instructed a creditor to pay for essential security equipment for employees in a conflict zone as an offset for an amount owed to Endeavour.
“The decision had no additional cost to the company and did not benefit me personally in any way,” he said.
“I omitted to inform the board that I had arranged for this offset, which I have freely accepted was a lapse in judgement.”
Mr. de Montessus said he was given 48 hours’ notice of Endeavour’s concerns around the payment, and “no proper opportunity to answer them.”
Separately, Mr. de Montessus has been accused by Endeavour of engaging in personal misconduct with colleagues. The company did not give details, but said concerns were raised through its whistle-blowing channel in October. These allegations had no bearing on Mr. de Montessus’s termination.
Mr. de Montessus responded that “no misconduct of any kind was discovered because none occurred.”
Endeavour used to be based in Vancouver but is now based in London, England. The company’s shares trade on the Toronto Stock Exchange. The mining company operates a suite of precious metals mines in West Africa, and it has been one of the most active acquirers in the gold sector over the past five years.
Ian Cockerill, deputy chairman of Endeavour, is taking over as CEO on a permanent basis. Mr. Cockerill earlier in his career served as CEO of South African gold major Gold Fields Ltd.
Wayne Lam, an analyst with RBC Dominion Securities Inc., wrote in a note to clients Thursday that Mr. Montessus’s termination could create “substantial near-term uncertainty” for Endeavour over the next few months.
Shares in Endeavour fell by 10 per cent on the TSX to close at $25.98 apiece on Thursday.
Terminations for cause are extremely rare in the business world. By being fired for cause, Mr. de Montessus stands to lose a lot of money.
In the company’s annual proxy circular filed in April, Endeavour said that a severance payment to Mr. de Montessus – or any other executive – would not be payable if the person is terminated for cause.
At the end of 2022, Endeavour estimated that Mr. de Montessus would have been entitled to a termination payment of US$10.23-million as long as it wasn’t for cause. And if he retired, he would be entitled to US$3.03-million.
Endeavour paid Mr. de Montessus US$8.34-million last year, including US$3.44-million in stock awards. In 2022, he was paid US$18.1-million. That compensation included a special US$10-million retention payment. Mr. de Montessus was on track to receive a final US$2-million instalment of the retention bonus this year.
The Paris-educated Mr. de Montessus was appointed as CEO of Endeavour in 2016, after previously serving as a board member for less than a year. Before joining Endeavour, he served as CEO of La Mancha Group, an investment firm controlled by Egyptian billionaire Naguib Sawiris. La Mancha is Endeavour’s biggest shareholder. Earlier in his career, Mr. Montessus worked for French nuclear energy company AREVA Group, and before that as an M&A banker with Morgan Stanley in London.
Under Mr. de Montessus, Endeavour bought several Canadian gold companies that had operations in West Africa. In 2020, Endeavour acquired Montreal-based Semafo Inc., and Toronto-based Teranga Gold Corp., adding mines in Senegal and Burkina Faso.
Endeavour said in its annual proxy circular that as of March 24, 2023, Mr. de Montessus held 1,036,756 shares of Endeavour and 619,244 performance share units. At Thursday’s close, those holdings were worth about $43-million.