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the lunch

Illustration of David Denison, former chief executive officer, Canada Pension Plan Investment Board, and current director of BCE and RBC.Anthony Jenkins/The Globe and Mail

One of David Denison's most cherished possessions is a thick, leather-bound book that he keeps in his study.

The book is full of messages from employees and his management team, presented to him when he stepped down this year as chief executive officer of the Canada Pension Plan Investment Board. It was a gift to celebrate a colourful seven-year run for Mr. Denison, whose job at the board was essentially to help it grow up.

When he took over in 2005, the CPPIB was five years old and had a staff of 70. It was responsible for about $70-billion is assets, mostly invested in passive market indexes. It now employs 850, steers a portfolio worth about $170-billion and owns a full range of active investments, including real estate, private companies, infrastructure and public company stocks.

During that time, Mr. Denison became one of Bay Street's most prominent deal makers. And yet, it is the people he managed that he considers his greatest legacy – the talent he brought in to guide the fund, even more than the money it made. "If you focus on the people … the deals will take care of themselves," he says. "And if you don't pay enough attention to the people and the culture, you will end up with some deals you probably won't be happy about having on your track record."

The CPPIB makes investments on behalf of the Canada Pension Plan, which is responsible for the retirement incomes of more than 18 million Canadians. You'd be hard-pressed to find a weightier job on Bay Street. Which isn't to say Mr. Denison, at 60, is done working. He recently joined the boards of two of Canada's largest companies – BCE Inc. and Royal Bank of Canada – and has another director's job lined up at a non-Canadian company, though that has not yet been made public. He has agreed to work on three private company boards, and has a roster of charitable activities.

For someone who spent his career as a shareholder and a committed advocate for better governance in boardrooms, it marks a dramatic move to the opposite side of the table. Mr. Denison says his early experience has reaffirmed that it is "tough job" to be a director of a large and complex company, and there is a steep learning curve. It has also convinced him of the benefit of having directors "with years of experience and therefore a broad context."

The Reds Wine Tavern, in the centre of Toronto's financial district, has been called the "Bay Street power lunch destination," which seems apt for someone who has been one of Bay Street's ultimate power brokers. But as he takes his seat and declines the wine list, Mr. Denison admits that, while he proposed lunch at Reds, he hasn't eaten at Reds in a long time and isn't familiar with the menu options.

"I don't pay a lot of attention to food and menus," he says.

It's easy to believe. He is whippet-thin, and opts for a modest mushroom soup and chèvre-topped salad for lunch.

His discipline runs core deep. A lifetime runner, the 60-year-old says his nod to retirement from the CPPIB is that he no longer gets up at 4:30 each morning to strap on his sneakers. He has backed it up to 5:30 a.m.

Mr. Denison's commitment to Canada's public pension system came relatively late in life. Before joining the CPPIB in 2005, he spent 10 years at U.S.-based mutual fund giant Fidelity, his last years as head of Fidelity Canada. He was lured to the CPPIB, he says, by the opportunity to shape a still-young organization.

The CPPIB had been created just five years earlier with a mandate to invest the CPP's money professionally with a very long-term horizon and at arm's length from government interference. Until the mid-2000s, it had largely been a passive index investor, but he says he was attracted by plans to transform it into an active investment fund.

"How many times in one's life or career do you get the chance to come into an organization like CPPIB, early stage, and really have the opportunity to help shape how it's going to evolve?" he asks.

The hardest part, he says, was convincing people – especially potential hires – it was possible. "We had to battle the perception that this was a passive investment organization, because that's how it had largely been operating.

"We didn't have a track record. There was a perception that we were a government agency and we were influenced by the government. … The early people who came on board really were taking a lot more personal risk and career risk than somebody who decides to join now."

He says his most important decisions in the early years were around hiring key staff at a time when the CPPIB was doubling its workforce annually.

"No matter what size of company you're talking about, it's not easy to double and do that well," he says.

It has become almost a cliché for managers to say they struggle to hire people who fit their culture. But in the case of CPPIB, the challenge was real. Under Mr. Denison's watch, the organization hired numerous senior investment experts with no background working for a public sector pension fund.

Many top deal makers have big personalities, a singular focus on a profit goal, and are accustomed to almost limitless compensation opportunities. That works well at a high-flying hedge fund, but can be an awkward fit at a conservative and very public pension plan.

"I personally interviewed a lot of people who I would say are terrific professionals in their area of activity – private equity or public market investing or real estate investing, whatever the case might be – but when we saw how they wanted to operate, I could quickly say, 'You're ideally suited to a different environment than the one we have here,'" Mr. Denison recalls.

It didn't always go smoothly, and Mr. Denison acknowledges there were hiring mistakes.

"Sometimes we did hire someone where the fit wasn't right on both sides. What we tried to do was say, 'Let's identify that as quickly as possible and we'll find ways to part company in as dignified a way as possible.'"

The worst period in the job, he says, was watching the fund's assets erode in late 2008 and early 2009 as financial markets melted down. In the last quarter of 2008 and the first quarter of 2009, the fund's total assets fell by $11.6-billion, losses the CPPIB recouped by the end of September, 2009.

Mr. Denison says it was highly stressful because the money is so crucial to the CPP's 18 million members.

"It was an incredibly difficult time for all of us at CPP Investment Board, seeing the value of the portfolio erode essentially day by day as we went through the fall of 2008 and the first quarter of 2009," he says. "We were in the headlights at that time. It wasn't easy. We were criticized by a number of people, including on the floor of the House of Parliament."

In life after the CPPIB, Mr. Denison has swapped "having one thing dominate my time" with a new approach to work with four elements: corporate boards, non-profit and charitable boards, public sector or policy initiatives like task forces, and playing a role with a university.

Evidently, once a portfolio manager, always a portfolio manager.

"Having been in the investment industry for a while, thinking about it as a portfolio comes naturally and thinking about diversification comes naturally as well," Mr. Denison says.

THE TROUBLE WITH PRPPs David Denison says the federal government's proposed new pension program for Canadians will have a limited impact without design changes.

The former CEO of the $170-billion Canada Pension Plan Investment Board said the proposed pooled retirement pension plan (PRPP) needs to be set up as a mandatory scheme except for those who actively opt out, saying he worries too few will participate at a level needed to make a meaningful change to retirement incomes.

"As they are designed right now, I don't think they'll make an impact – I don't think they'll lead to huge change," he said.

PRPPs must also be designed with appropriate default investment options, so people get steered into appropriate choices, he says, and must be offered at wholesale investment management prices so investors can save significantly more than investing on their own.

While Quebec has opted to set up a PRPP program, most provinces, including Ontario, are sitting on the sidelines and have not committed to the idea. Mr. Denison is worried politicians may let the issue slip away simply because it is a difficult one to address.

"I think there's still a window of opportunity to substantially improve the retirement savings amounts of Canadians," he said. "It would be a terrible shame if we let this opportunity slide with all this work that's been done."

Although he has retired after seven years overseeing the Canada Pension Plan holdings, Mr. Denison has not lost interest in the fate of the country's public pension and retirement system. If anything, his departure from CPPIB has given him more latitude to argue that a demographic bulge of future retirees, combined with longer life expectancies and a poor ability to save, all signal a looming crisis.

Mr. Denison stops short of endorsing an expansion of the CPP as a better option, but notes it would be an easy way of ensuring the goal of improved pension coverage is met. "There's no doubt to that outcome."

Janet McFarland



Born in Gander, Nfld., where his father was stationed as an airport meteorologist. Raised in Montreal, then moved to St. Catharines, Ont., in his mid-teens and finished high school in Toronto. He's 60 years old.

Home life

Lives in Toronto with his wife. Has a son, 19, who is in university, and a daughter, 18.


With a mathematics and education degree from the University of Toronto, he taught high school math for six years at Cardinal Newman high school in Toronto. Quit after realizing he no longer had a passion for teaching, and completed his CA designation.

Worked for a variety of investment firms, including at Merrill Lynch in the 1980s when he was posted to Europe and the Middle East.

Joined mutual fund giant Fidelity in 1995 and later became head of Fidelity Canada.

In 2005 was named CEO of the Canada Pension Plan Investment Board. Retired in June.


Has run daily for 37 years, typically at 4:30 a.m., and chooses hotels around the world that are well-located for good morning jogs. Tries never to run in indoor gyms, but gave in during a trip to Sao Paulo, Brazil, after staff stopped him at the door and insisted it was unsafe to run outside in the dark.

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