Date: October 13, 2009
Editor: Robert Tang |
Vol. 59 –15 |
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Club Program
Past, Present & Future |
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| Last Week: |
Rod McQueen – Dominic D”Allessandro |
| This Week: |
Mike Cooksey - Membership |
| Oct 20: |
Karin Eaton – Mural
Routes |
| Oct 27: |
Chris Musselman –
2010 R.I. Convention - Montreal |
Rod McQueen – Dominic D’Alessandro
International Service –
Group II
Mike Cooksey introduced Rod as a friend
and was last at our Club about 5 years ago promoting
his book on Edgar Bronfman Jr. Rod has written 12 books
and has been in Journalism for over 30 years. Rod and
his wife Sandy live in the west end of Toronto, and
have 2 children and 2 grandchildren. His son Mark is
CEO of Wellington Financial, a venture debt firm based
in Toronto. Mark is also chair of the Toronto Port Authority.
Their daughter, Dr. Alison McQueen, is Associate Professor
of Art History at McMaster University in Hamilton.
Rod began by creating a word picture
of what Dominic D’Alessandro, former CEO of Manulife
Financial, looks like. Watching a business leader enter
a room is always an instructive exercise. Some chief
executive officers try to dominate through their physical
presence, others simply assume proper attention will
be paid them once the world realizes who is in their
midst. Power, they believe, flows from their personality
and position. At five feet seven inches, Dominic D’Alessandro
is too short to use his height to control his surroundings.
Unlike many men of his height, however, D’Alessandro
doesn’t suffer from “short-man syndrome.”
He isn’t one of those who creates a commotion
as a way of claiming that there’s substance behind
all the clamour. But what may lack in stature, he makes
up in intensity. There’s an arresting aspect to
the beetling black eyebrows, the distinguished greying
hair, and the spring-loaded step that radiates self-confidence.
He seems to emit electricity from some secret internal
source.
For D’Alessandro, leadership is all about bold
vision, self-confidence, the ability to persuade others
to pursue an objective, and most of all, integrity.
At Manulife D’Alessandro built one of Canada’s
most profitable companies. In 2008, only the Royal Bank
made more money, but Royal had 65,000 employees to Manulife’s
22,000. As a result, profit per Manulife employee was
$192,000 compared with $84,000 for each Royal banker.
But this book isn’t just about numbers or corporate
strategy, it’s the tale of an immigrant boy who,
at six, suffered the death of his father and then was
raised by a fiercely independent mother who instilled
the drive and determination that took him to the top.
This is also the story of Canada, a land of immigrants
with hope in their hearts, seeking to overcome adversity
and create a new life.
D’Alessandro was born in Italy in 1947. His father
immigrated to Montreal in 1949 where he worked as a
laborer. The family lived in Little Burgundy, a working-class
Montreal neighbourhood. He spoke Italian at home, and
learned English at school and French in the streets.
D’Alessandro graduated from Loyola, a French-language
college in Montreal run by Jesuits, which has since
merged with Sir George Williams University to become
Concordia.
In 1968 he joined accounting firm McDonald, Currie,
now part of PricewaterhouseCoopers. In 1975 D’Alessandro
was hired by a client, Genstar, and was posted to a
joint venture in Saudi Arabia. At thirty, as general
manager of a company that provided port management and
freight handling services throughout the Kingdom and
the surrounding Gulf States, D’Alessandro oversaw
several thousand employees and dealt with clients in
the United States, Europe, and Asia. In 1981, he was
recruited by the Royal Bank to return to Montreal to
work in their finance division. He rose quickly through
the ranks and became executive vice-president with responsibility
for the bank’s financial planning, financial analysis,
taxation, accounting, and investor relations functions.
D’Alessandro had his eye on the top job, but in
1986, John Cleghorn was appointed president. D’Alessandro
was unhappy he’d lost out even though Cleghorn
had been with the bank longer, had worked in more divisions,
and was 45 to D’Alessandro’s 39. He had
two choices. He could swallow his pride, stick around
and see what happened … or he could go somewhere
else. He chose the latter route.
The same headhunter who’d hired D’Alessandro
for the Royal, Bob Swidler, found him a new role at
Laurentian Group where in 1988 he became president and
CEO of Laurentian Bank. Within two years of becoming
CEO, he’d replaced half of the top eight executives.
He expanded Laurentian Bank through seven acquisitions
and during his tenure saw share price do 10 per cent
better than his much bigger rivals.
In 1993, the ground shifted under D’Alessandro
once again. Desjardins, a co-operative financial group
with a network of caisses populaires in Quebec and credit
unions in Ontario, bought Laurentian. D’Alessandro’s
job was secure but the new owners were Quebec nationalists;
D’Alessandro was a federalist. He knew he wouldn’t
be able to hold his tongue. So he turned for a third
time to Bob Swidler to find a new role, this time as
CEO at Manulife.
Hired in 1994, D’Alessandro wasted no time in
making an acquisition later that same year: the Canadian
group life and health division of Confederation Life.
In 1996 he bought North American Life. That same year,
Manulife was awarded a licence to operate in China,
the second foreign company to be given access. Within
two years of D’Alessandro’s arrival at Manulife,
almost half of the top two dozen officers were gone.
In 1999, he took Manulife public Manulife’s and
raised $2.5 billion, the largest initial public offering
in Canadian history.
D’Alessandro’s took few colleagues into
his confidence. He was pugnacious and tough. If you
aroused his ire, he wasn’t afraid to ream you
out in front of your peers, feeling that everyone would
pull up their socks as a result. Not all of his efforts
succeeded. He took a run at Canada Life but was beaten
out by Great-West Life. And in 2002 he tried to merge
with CIBC. But the capstone of his career was Manulife’s
$15 billion takeover of Boston-based John Hancock Financial
Services in 2004, still the largest cross-border transaction
by any Canadian financial services company. The Hancock
acquisition doubled Manulife’s size and elevated
D’Alessandro’s reputation to legendary.
All went swimmingly until his last year in office.
In May 2008, D’Alessandro announced he would be
retiring as CEO a year later in May 2009. Share price
was in the $40 range where it stayed until the first
of October last fall when the global financial crisis
sideswiped Manulife, along with everyone else. Share
price fell to a low of $9. The value of his shares and
options in the company, which had been $188 million,
collapsed to $50 million.
D’Alessandro lobbied the federal government and
regulators for relief from the global crisis. None was
forthcoming. D’Alessandro raised new capital through
a bank loan and share issue. His successor, Don Guloien
cut the dividend in half, to build what he refers to
as “fortress capital.” The firm was never
in serious trouble, arrangements with policyholders
and others were never at risk. D’Alessandro was
unhappy about such an end to his career and told me
he wished he’d got out sooner before his reputation
was at all tarnished. Still, I think he is to be commended
for what he managed to achieve. Manulife was a strong
but small company when he took it over. It’s now
the largest insurance company in North America and the
third largest in the world. What he accomplished was
a far greater individual success story than clawing
his way up through a bank bureaucracy. How much better
it was to build his own brand-new summit than climb
someone else’s well-worn path.
As for investors, the compound annual return in the
ten years since the company went public (assuming dividends
were reinvested in shares) was 12 per cent even with
the precipitous fall during the last year 12 per cent.
Canada has too few heroes and fewer still courageous
corporate leaders. Dominic D’Alessandro of Manulife
Financial was both.
Copies of Rod’s book are available at all bookstores
or online or visit www.rodmcqueen.com
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