Wes Hall, founder, executive chairman and current CEO of Kingsdale, declined a request for comment about the organization's recent departures and Grant Hughes’s lawsuit. Mr. Hall is photographed at his Toronto home on June 3, 2020.Fred Lum/The Globe and Mail
The former president of Kingsdale Advisors, Grant Hughes, is suing the proxy advisory firm for wrongful dismissal.
In a statement of claim, which has not been tested in court, Mr. Hughes alleges that Kingsdale has become a “toxic work environment” by condoning the actions of founder and executive chairman Wes Hall.
Lawyers representing Kingsdale say Mr. Hughes’s allegations are “unfounded and inflammatory” and designed to “besmirch Mr. Hall’s reputation in the hopes of obtaining an unearned retirement bonus.”
The lawsuit comes at a time of significant upheaval at Kingsdale. In the last two months, chief executive officer Ian Robertson, Kelly Gorman, the executive vice-president of the governance advisory group, and Anna Fernandes, the vice-president of strategic shareholder advisory and analytics, have left.
Mr. Robertson resigned to launch his own advisory firm, the Jefferson Hawthorne Group, while Ms. Gorman departed to become the CEO of Advocis. Ms. Fernandes previously told The Globe and Mail she decided to move on after “leadership changes and the departure of several esteemed colleagues.”
Mr. Hall, who has since stepped back into the role of CEO, declined a request for comment about the recent departures and Mr. Hughes’s lawsuit. However, he previously told The Globe he is “proud of my people when they move on to greater opportunities,” pointing to the example of Ms. Gorman, adding that Kingsdale has “an extremely deep bench” of talent.
At the core of Mr. Hughes’s lawsuit is a series of events that occurred this summer, in which Mr. Hall is alleged to have humiliated him by stripping Mr. Hughes of his title and responsibilities – without prior warning – in an executive staff meeting. The actions, Mr. Hughes alleges, amount to constructive dismissal.
According to the statement of claim, Mr. Hughes came to Kingsdale in 2013, initially as a senior vice-president. By year’s end, he was promoted to executive vice-president; then, in 2017, he became the chief operating officer. In 2021, Mr. Hughes was appointed president, a role in which he handled some of Kingsdale’s most important lines of business, such as its proxy, corporate actions and shareholder outreach services.
“Mr. Hughes never received a negative performance appraisal in his time at Kingsdale,” the lawsuit states.
But on the morning of July 31, 2024, the claim alleges that Mr. Hall announced at an executive team meeting that he was demoting Mr. Hughes to executive vice-president and removing Kingsdale’s proxy business from his responsibilities. By lunchtime, Mr. Hughes said Mr. Hall communicated this title and responsibility change to all Kingsdale employees.
“Within minutes” of Mr. Hughes’s public demotion, Kingsdale’s IT staff manually changed his automated e-mail signature to reflect the new title, the lawsuit alleges.
According to the statement of claim, “the manner in which Mr. Hall made the announcement of Mr. Hughes’s demotion was designed and intended to humiliate and degrade him.”
But in the first two days of August, the lawsuit alleges Mr. Hall backtracked on the title change, although not the shift in responsibilities. The claim alleges Mr. Hall told Mr. Hughes that he had been unaware that Mr. Hughes had the title of Kingsdale’s president and that reference to executive vice-president had been an “oversight.”
Kingsdale’s statement of defence, which was filed by Pinta Maguire and Adam Soliman of Tyr LLP, paints a different picture of the events.
According to Kingsdale’s lawyers, the proxy firm was undergoing a strategic reorganization in the summer of 2024. Among the concerns was that the structure of the company’s proxy and governance teams was dysfunctional and wasting resources. The statement of defence alleges that Mr. Hughes believed a change in responsibilities was needed to fix the issue “and questioned whether the role of president was even needed.”
A decision was made to merge the departments and have each team report to a single executive who was not Mr. Hughes.
At the July 31 meeting, Mr. Robertson – Kingsdale’s then-CEO – told the executive team he was resigning. (His last day was in October.) Mr. Hall, who knew about Mr. Robertson’s announcement in advance, offered some “preliminary thoughts on restructuring.” An internal memo was then distributed announcing the changes, which “inadvertently named Mr. Hughes as executive vice-president,” Kingsdale’s lawyers wrote.
The IT team made the change after seeing the memo and without any direction from Mr. Hall, the statement of defence states. Mr. Hughes’s e-mail signature was changed back to president on Aug. 1.
Kingsdale’s lawyers argue that Mr. Hughes orchestrated his own departure by telling some colleagues that he intended to resign. They alleged he acted unprofessional, appeared disgruntled with co-workers and intentionally stymied the preliminary reorganization.
In an e-mail to The Globe, Michael Wilson, a partner with Goodmans LLP who is representing Mr. Hughes, said his client “categorically disagrees with the narrative set out in Kingsdale’s” defence.
Mr. Hughes gave notice to Kingsdale that its conduct constituted constructive dismissal on Aug. 21.
The statement of claim, which was filed Sept. 24, requests the equivalent of two years of pay – about $1.3-million including salary, bonuses and other benefits – plus $500,000 in bad faith, moral and/or aggravated damages, and punitive damages in the amount of $250,000.