Archive for August, 2009

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 telling of Manulife’s failed attempt to merge with CIBC would have satisfied Mr. Schachter. Or the inside details on Dominic D’Alessandro’s valiant efforts last fall to arouse Ottawa’s interest in his plight during the global meltdown. The descriptions of D’Alessandro by his own colleagues (one of them called him “scary”) should have intrigued any reviewer. They certainly were the most honest comments about a CEO I’ve ever heard and recorded in my twelve books over twenty-five years.

But reviewers are a breed apart. They like, they don’t like. Who can predict? Even after all these years, not I.

Amidst all the kerfuffle about Manulife cutting its dividend, one question has gone unasked. But before I get to that, let’s review the proceedings. In a bid to build what he calls a “fortress” company, newly minted Manulife CEO Donald Guloien cut the dividend in half. The step, he said, would raise capital levels and yield $800 million annually for acquisitions.

But capital is already hale and hearty. Manulife’s Minimum Continuing Capital and Surplus Requirements (MCCSR) must now be at 250, a historic high, and well above the regulator’s required 150. When Michael Lee-Chin recently sold the rest of his AIC funds to Manulife, he took shares. No cash required.

To be sure, some investors applauded the move. Stephen Jarislowsky, the Montreal money manager who is the third largest shareholder in Manulife, says he’s buying more at these prices because share price will double in the next two years.

Of course, the step to slash the dividend is also all about Guloien distancing himself from the previous office-holder’s activities. Mario Mendonca, an analyst with Genuity Capital Markets, has described former CEO Dominic D’Alessandro’s management style as the “swing for the fences” variety. Guloien seems satisfied to lay down a sacrifice bunt.

So here’s the unasked question: why are shareholders being asked to pay the piper with this cut in dividends? As Winston Churchill famously said when the electorate threw him out of office after his successful leadership during the Second World War, “If this is a blessing in disguise, it is very well disguised indeed.”

Tara Perkins, the financial services beat reporter for the Globe’s Report on Business, seems like an insightful writer. As someone who has written about the topic for thirty years, I can recognize a good journalist over a mediocre one. It’s just that Ms. Perkins doesn’t read books. Or studiously avoids citing books in her field.

Take today’s fine piece on Donald Guloien and his conservative stance at Manulife. She quotes the new Manulife CEO on the topic of last fall’s market meltdown as saying, “Those were very uncomfortable times.” I guess they were. Fine old firms crashed: American International Group, Bear Stearns and Lehman Brothers. The entire global financial system almost blew apart. She also quotes Guloien as saying Manulife’s response in raising capital by taking out bank debt and issuing shares was “very humbling.”

Ms. Perkins went to all the trouble of making an Access to Information request and got some documents about efforts by former Manulife CEO Dominic D’Alessandro to get Ottawa’s help. I wasn’t surprised that the best stuff was blacked out; there are people in Ottawa who do nothing but blackouts.

But there was plenty of public information on this very question that was much closer at hand: my book about Manulife, published in May. As Casey Stengel used to say, “You can look it up.” On pages 231-235, I give chapter and verse on D’Alessandro’s lobbying efforts with Superintendent of Insurance Julie Dickson as well as Finance Minister Jim Flaherty and Rob Wright, his deputy minister.

Ms. Perkins notes that D’Alessandro met with Prime Minister Stephen Harper on November 6 to discuss “financial institutions.” She goes on to say that it’s not known what was discussed. Well, I can tell you what was not discussed: relief for Manulife. I know that because I put the question to D’Alessandro during my research and he said, “I did not go to the prime minister. I spoke to the finance minister, the deputy finance minister. I spoke to some other people. I explained the issue. They were very sympathetic but to interfere and give direction to the superintendent at a time like this was not something they wanted to do.”

There are other details in the book that could have been usefully added by Ms. Perkins to today’s piece but weren’t. I don’t know why she didn’t get in touch with me or quote my book. On major stories like this, reporters usually want to ferret out and provide readers with information from all knowledgeable sources.

I think I’ll try the oldest technique in journalism, I’ll phone her this morning and ask why her research was so narrow. I’ll keep you posted.

UPDATE: Ms. Perkins seemed surprised to learn she could quote from my book. “I didn’t know you’d be open to that,” she said. Open to that? The book, after all, is in the public domain. Authors appreciate such mentions, with appropriate citations, of course. “It just didn’t occur to me,” she said. An answer so naive it must be true.