Yearly Archive: 2009

A wrong-headed ruling

The Supreme Court ruling yesterday about new defences on libel claims has many in the media cheering. Journalists now have new latitude when it comes to chasing stories and defending their work against those who feel wronged and sue for libel. As a long-time journalist and author, I think what the courts have done is a grievous error and sets up a series of new ways of measuring the sting of libel that will be difficult to define. The fact that we are now in sync with the United Kingdom, Australia and New Zealand gives me no ease. As someone...

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New directions

The two most recent appointments to the Manulife board of directors show interesting new directions for corporate governance. In the past, most directors were picked almost solely for their management experience. Current and former CEOs, for example, were always favored for boards because they knew how to run organizations. Under Gail Cook-Bennett as chair, the Manulife board wants new members to have similar experience but to bring some other helpful knowledge as well. Not only is new board member Linda Bammann a woman, bringing the number of females on the board to three of seventeen, she has U.S. experience where...

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Raise high the roof beam, carpenters

Let’s get this straight. Donald Guloien didn’t want to raise equity at $19.60, but $19 is OK. He didn’t want to do it in August, but November is fine even though the stock market is about the same level it was last summer. Shareholders who already took a hit when he cut dividends in half are being asked to suffer another wallop as he dilutes their holdings. Guloien explains his activities by saying he is building fortress capital. If Donald Guloien were King Arthur, he would never have had time to meet with the Knights of the Round Table, he’d...

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Board games

Suncor Energy Inc. has announced that Dominic D’Alessandro will be joining its board. Suncor will pay the ex-CEO of Manulife a $140,000 annual retainer, but half of that goes to buying Suncor shares until he owns $420,000 worth. Fees for attending the full board and committee meetings might add another $20,000 in income. Rumor has it that D’Alessandro will also be joining the CIBC board where his annual retainer will be $100,000. Again, a portion (in this case $60,000) goes to buying shares. Meeting fees are higher at the bank than at Suncor so he might earn $40,000 for showing...

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Doubling up

The notice in the newspaper legal section was easy to miss, just one column wide by 10 cm. high. In the ad, Manulife Bank announced an application to the Minister of Finance for a licence to open a trust company, Manulife Trust. Manulife has owned trust companies before. When Tom Di Giacomo was CEO, Manulife bought a handful of small trust companies and then gathered them all together to create Manulife Bank in 1992, the first insurance company to do so after the rules changed granting such entry into banking. Why are you applying for a trust company licence, I...

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Through the back door

In his Streetwise blog Andy Willis today has a rumor that Dominic D’Alessandro will be named to the CIBC board of directors. The whole idea resonates with ironies. After D’Alessandro left the Royal Bank in 1988, everyone assumed he did so because he was passed over for the CEO role. As I say in my book, there were other reasons, but that move set in motion a years-long belief by others that D’Alessandro always felt jilted and longed to be a senior banker. At Manulife, one of the deals he did not pull off was a merger with CIBC in...

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The black box

The third quarter numbers came out this morning and they ain’t pretty. Manulife lost $172 million in the three months ended Sept. 30 despite increased sales, two excellent acquisitions and improved stock markets. How can you lose money when things are going so well? The answer lies in the first sentence of the news release: actuarial assumptions. Actuaries run a black box operation at all insurance companies figuring out such mysteries as mortality rates so life insurance policies can be priced properly. Actuaries, it has been said, are accountants without a sense of humour. As such they’re deeply involved in...

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Down but not out

The powers that be at Manulife extol share price performance by noting that any investor who owned shares since the company went public in 1999 (and has reinvested dividends) has enjoyed a compound annual return of 12 per cent. I’ve cited those numbers myself when I promote my book in media interviews and speeches. After all, they are very impressive. Bernie Madoff had to commit fraud to produce similar results, I always add, tongue firmly in cheek. But how many investors have actually held shares for ten years while reinvesting all dividends? I imagine many individual investors are like me...

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Stand and deliver

Last night’s CBC National news was the first with Peter Mansbridge standing. I found myself checking his suit for wrinkles far more than necessary. I found none, not even in the crotch area, the usual worst place. In what is clearly a rip-off of Wolf Blitzer’s CNN Situation Room, the entire hour is done with everyone standing. At times, they went to ludicrous lengths to stick with the awkward format. Mansbridge and a reporter stood facing each other on a riser the size of a ping-pong table with a rear screen in between them that projected points they were making....

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Bastille, be gone

It’s hard to believe that Edgar Bronfman Jr. has just been charged, along with Vivendi executives, with misleading investors. First of all, the $34-billion Seagram-Vivendi merger in question took place in 2000. Surely the statute of limitations has run out long since. Second, poor Edgar Jr. was not exactly on the inner circle with Jean-Marie Messier, the Vivendi CEO who bought everything in sight except the Arc de Triomphe, which was visible out his office window. Once he got fed up with Messier, Edgar Jr. worked with other directors to oust the megalomaniac in 2002. Not exactly how you pass...

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A tale of thirty-eight cities

Manulife has received approval to sell insurance in Shantou, a port city in China. While all the attention of late has been on variable annuities sold by Manulife in the U.S. and the strain that has put on the balance sheet, in many ways the future of the firm is in China. After first receiving permission in 1996 to enter the Chinese market in Shanghai, Manulife has been adding cities at a fast pace. Manulife is now licenced in 38 cities and has more than ten thousand agents. Most of those cities are huge. Shantou has a population of five...

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Back to the future

Manulife’s new CEO Donald Guloien has a management style that’s rare. During a recession when most business leaders are trying to squelch pessimism, Guloien is busy promoting something: prudence. “I think at this stage of the cycle, prudence and conservatism is called for,” Guloien told Bloomberg’s Sean B. Pasternak in an interview. “The prudence our grandmothers had, the prudence farmers have in the Midwest; a little more of that needs to be applied in the executive suite.” That’s why Guloien cut the Manulife dividend, reduced sales of variable annuities (VAs) and hiked hedging on VAs already sold. Praise followed. “Don’s...

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Happy Birthday

Today marks the tenth anniversary of the first day of trading on the Toronto Stock Exchange when Manulife Financial went public. Since 1999, the company has quadrupled in size, much of it due to the $15 billion takeover of Hancock in 2004. Market cap has gone from $9 billion to $37 billion. More importantly for shareholders, anyone who was part of the initial public offering, hung on, and reinvested their dividends in shares, has enjoyed compound annual returns of more than 12 per cent. Bernie Madoff had to commit fraud to offer his clients the same! To celebrate, the company...

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A modest proposal

With a fall election in the offing, controversy will soon begin around the televised debates. In the last couple of elections, there has been much to-ing and fro-ing about which party leaders would be included. The television networks have tried to limit the numbers, but there was such a foofarah that they finally relented and all five parties (Conservative, Liberal, NDP, Bloc Quebecois and Green) were represented. The outcome was akin to a schoolyard brawl with too many voices and too little time. I’d like to go one step further and urge that we not only reduce the number of...

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Drama or dramamine?

Harvey Schachter, the Globe and Mail reviewer, started off talking about my book in a positive way, calling it “well-researched and intelligent” but then veered elsewhere saying it lacked drama. Fortunately, other commentators have praised the book. Joe Martin, Director of Canadian Business History at the Rotman School, has said the chapter on succession “is the best I have ever seen on corporate succession in a Canadian context.” Tom D’Aquino, CEO of the Canadian Council of Chief Executives, said: “This work makes for an important addition to business history in Canada.” As for drama, I would have thought the first-time...

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