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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