MONTREAL -- The departure of Power Financial Corp. executive chairman Robert Gratton is the culmination of a carefully plotted succession strategy at the financial services powerhouse that ensures continuity and a smooth changing of the guard, top officials say.
Mr. Gratton - soon to be 65 - said yesterday at the holding company's annual meeting that he is stepping down after three years as chairman and 15 as president and chief executive officer.
The chief strategist behind such coups as the takeovers of London Life, Mackenzie Financial and Canada Life, Mr. Gratton will take up the position of deputy chairman at Power Financial and stay on as a board member.
Paul Desmarais Jr. and his brother André will share the chairmanship and Raymond McFeetors - the chairman of Power Financial subsidiary Great-West Lifeco Inc. - becomes vice-chairman.
Power Financial is a subsidiary of Power Corp. of Canada, which is controlled by the billionaire Desmarais family. Power Corp. founder Paul Desmarais Sr., 81, is still active as chairman of Power Corp.'s executive committee.
The changes reflect the commitment to continuity and to ensuring that a solid team is in place at Power Financial, the company's president and chief executive officer, Jeffrey Orr, said after the meeting.
He characterized the approach as building on the strengths of a group that has long been in place. "André and Paul are part of that and Ray [McFeetors] is being added to the team," he said.
Mr. Desmarais Sr. said Mr. Gratton has "built a great team and that team is going to carry on."
Asked whether the decision-making structure might be unwieldy, he jokingly replied: "It's always been unwieldy since I'm there. But it works pretty well. We'll continue the same sort of spirit."
Power Financial spokesman Ted Johnson said the Desmarais brothers - who already share the co-CEO duties at parent Power Corp. - are accustomed to divvying up titles.
"It's a seamless sharing of responsibilities."
The changes were announced as Power Financial said first-quarter profit rose 22 per cent on gains at its insurance and European investment subsidiaries.
But Mr. Orr said in his presentation that much work remains to be done on troubled U.S. money manager Putnam Investments Trust, which Great-West Lifeco bought for $4.6-billion last year.
"Putnam's equity mutual fund performance has actually weakened since the closing [of the deal], and mutual funds have remained in outflows," he said.
The mutual funds' performance "has been weaker than we would have hoped over the last nine months," Mr. Orr told reporters.
On the institutional side at Putnam, however, results have been better than expected, he added.
POWER FINANCIAL (PWF)
Close: $35.85, down 28¢
Who's in, out at Power
Robert Gratton (second from left), who served as president and CEO for 15 years, will step down as executive chairman and become deputy chairman at Power Financial. He will also stay on as a board member.
Paul Desmarais Jr. (far right) and his brother André (far left) will share the chairmanship and Raymond McFeetors (not pictured) - the chairman of Power Financial subsidiary Great-West Lifeco Inc. - becomes vice-chairman.
Power Financial Corp.
| Q4 | 2008 | 2007 |
| Profit | $586-million | $482-million |
| EPS | 80¢ | 66¢ |
| Revenue | $18.7-billion | $7.55-billion |
Source: company
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