Wednesday, January 7, 2009

(No.4) CEOs: Dopes and Gentlemen

During more than 35 years in the life insurance business as both a company employee and as the editor of my own magazine (the Canadian Journal of Life Insurance ) I have known -- and known of, based on inside sources -- quite a few company CEOs as well as platoons of senior executives in numerous life insurance companies.

I have not been awed by consistent brilliance within this group.  The majority have been decent and competent people;  a few have been thorough-going boors and bullies;  several had industry IQs only slightly above room temperature while a number were very bright indeed.

My experience does not lead me to be as harsh on CEOs as New York Times business columnist Thomas Friedman who, having considered financial industry leadership vis-a-vis the recent U.S. financial meltdown, declared [NYT,Nov 26,2008] that  "some of our country's best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye.   But it wasn't only the bankers". 

Indeed it was not, as the insurance industry's own experience attests.

I think of the performance of North American life insurance company CEOs over the past several decades as a spectrum, ranging from the merely custodial all the way to stupidly reckless with the majority somewhere in between.  I think that more frequent, costly corporate mistakes have been quietly buried internally than either the financial media or the rating agencies have ever come close to realizing.  The current 'meltdown' makes it clearer than ever that while some key executives have played unique and beneficial roles others were directly responsible for inferior, often disastrous corporate results for which, nonetheless, they were too often paid obscene amounts of money.   

In my view too few industry CEOs, especially in recent years, have been gentlemen in what I regard as the best sense and one which set an example for those they led.  As I said in a 2006 speech to the 52nd annual Banff School  two of the CEOs who stand out in this sense in my experience are K.R. MacGregor, President and then Board Chairman of the Mutual Life of Canada (1964-1982) and Don Stewart, current President of Sun Life's world wide operations starting in 1996.  For me these 2 men represent the opposite of the publicly posturing, spotlight-loving, self-promoting and often arrogant CEOs one encounters far too often these days through the media. 

In terms of defining who in the financial services CEO group of today are worthy of being called gentlemen I am partial to the view that a gentleman is the first to express thanks, the last to complain and always understanding of the fact that rank is not a synonym for class [q.v., Jean Beliveau, a person who by example defines the word gentleman].