The contrast was startling. Michael Sabia’s nomination as the head of the Caisse de dépôt et placement du Québec detonated like a bomb in March, 2009. But the extension of his mandate almost went unnoticed.
The passing of Paul Desmarais and the appointment of Janet Yellen as head of the U.S. Federal Reserve overshadowed other business news on Wednesday. Still, that Mr. Sabia would keep his job at the Caisse for five more years was far from assured under a Parti Québécois government. Ever since the Quebec pension fund manager was created in 1965, every regime change has led to the replacement of its CEO as soon as the government could put one of its friends in without risking a lawsuit for breach of contract.
But what is equally interesting is why Mr. Sabia dearly wanted to stay in a job that, at first, seemed to suit him as well as a Bonhomme Carnaval costume.
When Mr. Sabia became the first anglophone to head the Caisse, then-opposition PQ leader Pauline Marois was not his fiercest critic. Within the PQ, former premier Bernard Landry deplored his “Canadian national culture,” which allegedly manifested itself when Mr. Sabia let BCE Inc.’s decision-making authority move from Montreal to Toronto. Former premier Jacques Parizeau depicted him as a disciple of the dark federalist forces.
Ms. Marois, on the other hand, blasted the quick and partisan process by which he was picked. It was not Mr. Sabia’s fault that then-Liberal premier Jean Charest botched his appointment and made a farce of the Caisse’s so-called independence by having a newly created committee rubber-stamp his choice. However, Mr. Sabia’s arrival would not have created such an uproar had he been viewed as an ideal candidate. With the exception of Mr. Charest, nobody had him on their wish list.
Mr. Sabia’s critics pointed to his uneven track record at BCE. His three years at Bell Canada International went sour when the wireless operator was surprised by Brazil’s currency devaluation and by the deflating tech bubble. When he succeeded Jean Monty at the top, he cleaned up the conglomerate, selling off companies and stakes that weren’t central to BCE’s core mission, such as Teleglobe, BCI, CGI, BCE Emergis and Telesat Canada.
However, Mr. Sabia looked at a loss with what to do next with all that money. He toyed with the idea of a dividend, a share buyback and an income trust conversion. Even the Ontario Teachers’ Pension Plan got impatient – and we all know how that went down.
Since Mr. Sabia arrived at the Caisse, he has quieted most of the institution’s critics, despite one or two tempests early on. He overhauled the way the Caisse manages its risks and compensates its managers. And the pension fund manager finally got off its roller-coaster ride. “He rehabilitated the Caisse in an impeccable way,” said Finance Minister Nicolas Marceau in a phone interview, adding it was “natural” to renew Mr. Sabia’s mandate even if his position was coveted.
From July, 2009, to the end of 2012, the Caisse recorded a 10.7 per cent average annual return. It beat its overall benchmark index in 2010 and 2012, but not in 2011. It also ranked amongst the best of its class in 2010 and 2011 (first quartile of pension fund managers with assets over $1-billion ranked by RBC Dexia), but not in 2012. The Caisse saw its total net assets return to their precrisis level in 2011; they reached $176.2-billion by the end of 2012. However, the institution still has a way to go to erase the disastrous 25-per-cent drop of 2008 so that its depositors can meet their obligations towards retirees.
Moreover, Mr. Sabia made good on his promise to invest in large- and mid-sized Quebec companies with strong export prospects.
This wasn’t something Mr. Sabia did to cater to the government. In his earliest interviews as Caisse president, long before the PQ got elected, Mr. Sabia argued that it was easier to pick winners out of the companies that are close to home as opposed to those that conduct business on another continent.
Having just turned 60, Mr. Sabia could have left the Caisse head held high. He put the Quebec Inc. institution back in order. And he evidently doesn’t need the money; in 2008 alone, BCE awarded him close to $21-million.
But no matter how good he has become at this, being known as the guy who cleans up other people’s messes, as he did at BCE and with Paul Tellier at Canadian National, is something that vexes Mr. Sabia, people close to him say. He wants to be remembered for more than that.
Staying at the Caisse is Mr. Sabia’s chance of building something of his own. It is also a chance to prove his BCE detractors misjudged him. And a man is never as determined, obsessed even, as when his legacy is at stake.