Last week Gord Nixon, President and Chief Executive Officer of the Royal Bank of Canada, announced he was stepping down after thirteen years of service. This generated considerable discussion in the media as to the timeliness of his decision. Is this too early?
Mr. Nixon has been a very successful CEO, producing results for the bank well above the TSX average and cementing its position as the dominant Canadian bank. He took the job when he was 43 and since then has quietly transformed the bank, adhering to his vision.
Here is the issue for me, given the size of the bank, its 54,000 employees and the amount of capital invested. Gord Nixon has created forward momentum similar to that of a fully laden oil tanker steaming through the ocean. It will take a lot of energy and distraction to change this direction. Stepping down now is not, I believe, in the best interest of employees or shareholders.
As RBC is a sizeable organization, its CEO should have developed a strategy that looks out 30+ years, and this should become a rolling 30-year plan. Mr. Nixon has only been implementing this strategy for 13 years, and implementing it very successfully. The bank is now garnering the rewards of his strategy. Figuratively, why rock the boat? Employees thrive in an environment that provides them with consistency and clarity. Mr. Nixon is obviously providing this. He should be given another four years to protect his thousands of employees from the distraction of adjusting to the ideas of a new CEO, instead of remaining steadfastly focused on implementing the current strategy.