Friday, May 12, 2006

Manulife CEO to Diversify Holdings

The Globe and Mail, Sinclair Stewart,12 May 2006

All good investors understand the importance of diversification, and Dominic D'Alessandro is no exception.

Now that he's accumulated nearly a third of a billion dollars worth of equity in a single company, he's making a move to juggle the portfolio.

The chief executive officer of Manulife Financial Corp. announced plans yesterday to exercise as many as 500,000 stock options this year and sell them in the markets: The first time in his 13 years at the helm that he's actually reduced his holdings in the company.

The value of this stock is almost $36-million, based on the financial services giant's closing share price of $71.79 on the Toronto Stock Exchange yesterday.

But it represents just 12 per cent of the common shares Mr. D'Alessandro owns either directly, or expects to obtain through options or other share awards.

"There's a few things I want to do," he said in an interview yesterday. "You know, some things I might want to buy."

By his own admission, Mr. D'Alessandro is not much of a big spender -- "I live a modest life," he says -- although he did recently purchase a vacation home in Naples, Fla. He said he wanted to free up some liquidity for personal reasons, without elaborating, but insisted that Manulife would continue to represent his largest single investment by a wide margin.

Today, the market value of his equity would stand at almost $300-million, but that's not all his gain, as the bulk of his investment is in options that must be exercised at various strike prices. When you factor out the cost of exercising these options, he's up about $170-million.

Mr. D'Alessandro, 59, has 2.45 million exercisable stock options worth about $88-million and 719,332 unexercisable options valued at $10.2-million, according to Manulife's most recent proxy circular. He also has more than 690,000 share units worth about $50.2-million and 281,250 common shares worth more than $20-million.

"It's a very, very, very, very, very, large [stake]," he said. "I've been here almost 13 years, and I've constantly reinvested my bonuses and my long-term incentives and so forth. And this is the first sale or exercise of its kind since I've been here."

Mr. D'Alessandro said his decision to unload some options after having held them for almost seven years is "not untypical" for a CEO, and added that he wanted to alert the market so investors would understand why he was selling.

In his announcement, Mr. D'Alessandro said that given the size of his current stake in Manulife, his financial advisers encouraged him to diversify his investments.