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Bruised D'Alessandro offers olive branch Add to ...

One of the things Dominic D'Alessandro wants to do soon after he retires is take his wife on a trip to Italy. While he's there, he plans to enroll in language school - because, while he retains some of the language he learned as a boy, he'd really like to know how to do it right.

First things first, though. In the final days of a 15-year run at Manulife Financial, there's business to take care of, amends to make, reputational damage to repair.

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An awful lot of executives in banking and insurance will tell you the past year has been the roughest of their business lives. Mr. D'Alessandro agrees, but in some ways the past few weeks have been the most bruising yet, even as the first rays of light appeared in the economy and Manulife's stock more than doubled from its March low.

His $12.5-million (U.S.) - about $15.1-million Canadian - package of salary and share units for sticking around until May has become like a scarlet letter. Canada hasn't had an AIG, but it did have a stock market crash like everywhere else. So the Manulife chief's golden handshake has served as a proxy - a fat target for the pent-up public frustration about the kind of insider rewards that he himself once criticized as "enormous, some would say grotesque."

A column on the subject that ran here three weeks ago elicited dozens of responses. They were nearly unanimous in the view that the money was outrageous, out of line, out of touch. "The board should be ashamed of this action," wrote one shareholder in a letter to the company. A man from British Columbia, part-owner of a company that had hired Manulife for its employee medical and dental coverage, said his firm was moving its business in disgust at what had happened at the insurer. Even Bay Street types who take home six- and seven-figure cheques quietly said that accepting the money was, if not greedy, certainly insensitive. Mr. D'Alessandro heard the criticism, too.

This wouldn't do. Not for a proud man who wears his Order of Canada pin on his lapel and his heart on his sleeve. Not for someone who has as much of his self-worth as his net worth wrapped up in Manulife. "I've built - we've built - a very great company here in Canada, against all the odds," he said during an exclusive interview yesterday. The notion that it's now perceived as something else "just kills me."

"I don't want my reputation to be sullied or clouded by an impression that's been created that I'm a big taker," he said. "I've always earned everything I've gotten in life, and it's just unbearable to me that people would think I'd be lumped in with some of the egregious cases that we all know about."

Unbearable? Maybe worse: "To have people think of me as a taker, a user, just makes me sick." (Note to the mob carrying pitchforks: Financial executives have feelings, too.)

He mulled what to do. He flew to Florida and while there chewed it over with Arthur Sawchuk, Manulife's long-time chairman. Mr. Sawchuk gave him no specific advice, but Mr. D'Alessandro had already got plenty from other sources. He made a decision to voluntarily attach conditions to most of the money. He'll forgo $10-million (U.S.) in share units if Manulife fails to rebound to $30 by the end of 2011, and $5-million if it falls short of $36.

The latter number, if achieved, would represent Manulife's return to the $60-billion club, which would signal its return to greatness in an industry where market capitalization still equals prestige (and opportunity). It would also earn Mr. D'Alessandro many millions more in stock option gains. But it can only happen once the market stops worrying about Manulife's exposure to falling stock prices through variable annuities, a kind of individual pension with guaranteed returns. Mr. D'Alessandro still defends the decision to sell the guarantees, and to not hedge much of the risk, as calculated, not reckless.

"We don't go take this money and invest it in CDO-squareds or [credit default swaps]" the derivatives that helped sink AIG. "[But]that fact that we weren't being cavalier just never seems to emerge. It's as if, 'Oh my God, what a stupid thing they did, they went and guaranteed returns to people and they invested the money in a basket of assets.'" But, he added, "that's what pension funds do."

For some, his act of contrition won't be enough. They'll point out that he stands to get a $3-million-a-year pension, generous even by CEO standards, and that he made some $20-million exercising stock options in the years before the crash, and that by any measure he will walk away a wealthy man no matter what happens at Manulife after he's gone.

You can't satisfy everyone. But you can prove that you're not deaf to the shareholders' cries of pain. Mr. D'Alessandro did that yesterday. Leaving Manulife, like speaking Italian, is something he wants to do right.

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