In the late 1980s, with Canada’s federal debt soaring and interest costs chewing through taxpayers’ cash, John MacNaughton and his colleagues at Burns Fry Ltd. came up with a creative solution to the nation’s fiscal problems.
They would revive Elvis from the grave and schedule him to perform at a theme park built on Parliament Hill, using the proceeds to pay down the debt.
Or so ran a classic skit that saw Mr. MacNaughton don a white sequined pantsuit at a company dinner, slick back his thick mane of black hair into an Elvis pompadour, and take the stage to announce a plot to rescue Canada, with help from colleagues costumed as prime minister Brian Mulroney, televangelist Jim Bakker and his wife, Tammy Faye.
“I had the skit written by the Air Farce guys,” recalls former Burns Fry head of investment banking Thomas Tutsch, who played Tammy Faye. “We knew Roger Abbott a bit. … And they wrote this crazy skit.”
Mr. MacNaughton, who died Feb. 15 at age 67 after treatment for cancer, fit none of the simple stereotypes of the dull banker or the rapacious financier.
In a 31-year career in the brokerage industry, which culminated with him becoming chief executive officer of Burns Fry (and later BMO Nesbitt Burns, after the firm was acquired by Bank of Montreal), he eschewed plots to wring money from clients or make a quick buck, and championed a straight-as-an-arrow business ethic that is still the talk of his former colleagues.
“He was a genuinely nice, decent person,” says Peter Eby, former head of Burns Fry. “Not all people in the investment industry are that way. Many of the people who have been very successful, I couldn’t be as kind about. I think that’s what made him stand out. I don’t think I’ve ever met somebody who doesn’t like John, and you can’t say that about a whole lot of people. He was the most honest person I’ve ever met.”
Power Financial Corp. chief executive Jeffrey Orr, a long-time friend who worked under Mr. MacNaughton at BMO Nesbitt Burns in the 1990s, said he often talked with others at the firm about how their boss could have pursued a totally different career.
“He was very effective in business, but I could just as easily have imagined him as a foreign aid worker. He was a very unique guy,” he recalls.
“I say that with impact, because we would often sit back and go, ‘John is such a thoughtful, caring individual.’ But he was effective nonetheless.”
For all its success, it was a career that could have gone so differently in so many ways. In his early years in particular, there was an expectation that Mr. MacNaughton would head into the “family” business of politics or law.
Mr. MacNaughton was born March 6, 1945, and grew up in Exeter, a small town near London in southern Ontario. His father, Charles, was a provincial politician who was elected as MPP for Huron County from 1958 to 1973, serving in several senior cabinet roles in the Conservative governments of premiers John Robarts and Bill Davis.
“The MacNaughtons were royalty in that town,” says Exeter native Bill Etherington, former CEO of IBM World Trade Corp., who was in the same grade in school as Mr. MacNaughton’s older sister, Heather.
Exeter still has a MacNaughton Park, located on MacNaughton Drive, as a lasting tribute to Charles MacNaughton’s public service.
John MacNaughton earned a BA in economics from the University of Western Ontario, and after an exhilarating summer working at the Ontario pavilion at Expo 67, he headed off to law school to fulfill his family’s expectations that he would become a lawyer and settle back in Exeter.
Former Osgoode Hall law school colleague David McFadden says Mr. MacNaughton quit after the first term.
“He was there for the fall, and then I didn’t see him in the new year. I thought maybe he got sick or something happened to him, and I met him and he said, ‘No, I quit,’” Mr. McFadden says. “That was pretty characteristic of John. He had very clear sight of what he wanted to do and how best to do it.”
But in that instance, however, he was unsure what he would do next.
Mr. MacNaughton turned for advice to family friend and Ontario finance minister Leslie Rowntree, a Conservative cabinet colleague of his father’s, who peppered him with questions about what he was interested in, what types of books he enjoyed reading and what sections he liked to read in the newspapers. The answers were consistent: Everything.
So Mr. Rowntree recommended the investment business, saying it touched on every possible industry area.
In his long career at Fry & Co – which underwent five mergers during his tenure – Mr. MacNaughton saw the company through growth and crisis. When the entire mergers and acquisitions department quit at once to form a competing boutique firm, for example, Mr. MacNaughton took charge as the head of the department.
“It was a bit of a crisis for the firm at the time, but John stepped in as head of M&A and rebuilt the team,” says Don Johnson, who was president of Burns Fry in the 1980s.
By the late 1980s, the three senior partners at Burns Fry turned their minds to succession planning, and decided to name a president of the firm from the younger generation. To their surprise, a group of senior staffers took the rare step of petitioning for Mr. MacNaughton to get the job.
“They basically got together and they came to us and said they wanted John,” Mr. Eby says. “They actually advocated for him, even though any one of them could have been a legitimate candidate.”
Former Burns Fry colleague Paul Allison, now CEO of brokerage firm Raymond James Ltd., said Mr. MacNaughton was a mentor to a generation of younger finance executives.
“In this business, there are times when things are pretty challenging – it’s a cyclical type of business,” Mr. Allison said. “And business leaders oftentimes, to deliver short-term results, end up compromising. It never entered John’s mind that he would switch his strategy to capitalize on something in the short term. That’s what makes enduring long-term great leaders and great companies.”
While building his brokerage career, Mr. MacNaughton kept up parallel interest in politics, working behind the scenes for the Ontario Conservative party and serving as national secretary of the party in the 1970s.
Former Ontario premier Bill Davis says he always hoped Mr. MacNaughton would step out from behind the curtain and stand as a candidate. But he could not be convinced to run, perhaps because he knew firsthand the intrusion it makes on privacy and personal life.
“I think he would have made a great contribution if he had,” Mr. Davis says. “But he made the decision not to, and he made a contribution in another form.”
In 1970, while working on Mr. Davis’s party leadership campaign, Mr. MacNaughton was introduced to Gail McKinnon. She was not involved in politics but was at the headquarters because she was helping work on a project.
The pair started to date, staying together even after Mr. MacNaughton was posted to New York in 1971. In 1972, while still working in New York, he received a shocking diagnosis of Hodgkin’s lymphoma and began cancer treatment at age 27. They married a month after his last treatment in 1973.
Gail MacNaughton says cancer changed her husband’s outlook, making him appreciate what he had in life.
“For John and me, we lived with it,” she said. “We never liked the terminology of battling cancer. John lived with it, and with such grace. It is an extra dimension of one’s life.”
The couple had two children, Matthew and Adeline, and three grandchildren, Malakhai, 11, Nathaniel, 6, and Olivia, 3.
Ms. MacNaughton says their cottage in Muskoka was a major part of their lives away from work, where they read, visited with friends and John golfed.
“It was a traditional cottage with time with friends and board games and reading and quiet time,” she says. “It was a haven for us.”
In 1999, Mr. MacNaughton left BMO Nesbitt Burns and became the first CEO of the Canada Pension Plan Investment Board, a new body set up in 1998 to manage the investments of the Canada Pension Plan.
Mr. McFadden said Mr. MacNaughton had made his fortune when the partners sold Burns Fry to Bank of Montreal in 1994, and he wanted to do something to give back to Canada. He saw the CPPIB job as a form of public service.
Gail Cook-Bennett, who was the first chair of the board of the CPPIB, said the new body needed a leader who could deliver instant credibility to skeptics in the investment community, and who could communicate openly with the public. Mr. MacNaughton filled both criteria ideally, she said.
His less-known contribution, she adds, was that he petitioned finance ministers across Canada to relax restrictions that required the CPPIB in its first three years to invest only in stocks that tracked major stock market indexes.
She said Mr. MacNaughton was alarmed in 1999 and 2000 by the huge run-up in the share price of Nortel Networks Corp. stock, and thought it was unwise to invest so much of the CPPIB’s assets in the company. His lobbying won him the right to “actively” invest half of the Canadian stock portfolio, allowing Mr. MacNaughton to sell much of its huge exposure before Nortel’s share price plummeted.
“Had that not happened, I think it would have been a severe blow to the organization, and nobody would have really understood why we lost so much,” Ms. Cook-Bennett says.
Among his many other roles on boards and committees, Mr. MacNaughton served as chairman of the Princess Margaret Hospital Foundation and was vice-chairman of the University Health Network, which oversees three major Toronto hospitals.
University Health Network CEO Robert Bell said Mr. MacNaughton championed methods to improve delivery of health care to patients, and was an enthusiastic head of the board’s quality committee.
“He was passionate about it,” Dr. Bell says. “He demonstrated how an intelligent layman with a real commitment to health quality could really improve performance at a a hospital. He was an expert governor, and just by applying great principles of governance, he was able to do that.”
Cancer was never far from Mr. MacNaughton’s life. There were recurrences of the lymphoma, which he fought, and several years ago he was diagnosed with melanoma, a malignant skin cancer. He had a tumour removed, but the cancer spread.
By late 2012, it was clear treatments would not work and he would not live long, says long-time friend and colleague Gordon Lackenbauer, who worked with him at BMO Nesbitt Burns.
“He knew it was coming,” says Mr. Lackenbauer, who spoke to Mr. MacNaughton regularly by phone.
“The grace with which he handled all of that had to be seen to be believed. I’m sure he had his moments to himself, but whenever he was dealing with anybody outside the family, it was something that was almost incredible. He dealt with it with such grace.”