Top 100 CEOs: Executive Hot Seat
Tony Wanless takes a look at the list of B.C.'s top 100 CEO's and examines the executives in the hot seat.
Captaining the companies that grind up ordinary CEOs is hell. So why would anybody take on these gigs? They promise failure more often than triumph and every move is second-guessed by an army of armchair quarterbacks. Simple: tough CEO jobs offer irresistible ¬challenges to those leaders who perform best under pressure. These are the extreme A-types, the ¬conquerors, the fix-it people who need a daily dose of aggravation to keep their competitive edge.BCBusiness asked analysts, consultants and industry insiders: Which CEOs in B.C. are truly earning their fat paycheques?
- Darren Entwistle, CEO, Telus Corp. (Top 100 Rank: 1)
- Joe Houssain, CEO, Intrawest Corp. (Top 100 Rank: 14)
- Pat Jacobsen, CEO, Translink (Top 100 Rank: 37)
- Robert Butchosfsky, CEO, QLT (Top 100 Rank: 71)
- Jason Cohenour, CEO, Sierra Wireless, Top 100 Public Rank: 41)
- Reid Carter, Managing parter, Brookfield Timberland Investment Management
DARREN ENTWISTLECEO, Telus Corp. (Top 100 Rank: 1)
Challenges
Is there a CEO in B.C. who faces more challenges than Darren Entwistle? The brash young executive leads Telus, the 26,000-employee telecommunications giant that lays claim to $7.9 billion of annual revenue, 4.7 million network access lines and 4.1 million wireless customers.
Entwistle, who arrived at the sleepy utility in 2000 with a mandate to shake Telus out of its worker-entitlement culture and “good enough” thinking to join the rapidly evolving telecommunications world of the 21st century, has stirred the pot well. He may have gone head to head with the unions, but there’s still plenty of trouble at Telus.
Entwistle is operating in a landscape that’s anything but calm. Telus and Bell have carved up the country, and the two routinely duke it out over who is going to snare the lion’s share of the ever-changing telecom terrain.
And that terrain is rife with hazards: new Voice over Internet Protocol (VoIP) systems such as Skype and Vonage allow anyone with a computer to avoid the telephone systems and communicate via the Internet instead; the new wireless transmission technology WiMax threatens traditional and expensive wireline systems and promises the same service at a fraction of a price; new cell-phone service providers such as Virgin eat away at Telus and Bell’s share of the growing cellular service market; lower-cost providers are nipping at their heels with cheaper phone service; and non-traditional communications companies such as Shaw Cable are encroaching on their traditional territory.
Meanwhile, stock prices are precarious, as is tenure in the executive offices: George Cope, former president and CEO of the burgeoning Telus Mobility, recently jumped ship to become COO at rival Bell.
Opportunities
Entwistle was once named “one of the toughest SOBs in business” by the Globe and Mail, and for good reason. He does not suffer fools, and maintains his vision through thick and thin. That vision is simple: cut costs and grow by hitching yourself to the unstoppable Internet train. Telus must chop expenses and grow through strategic delivery of services that go well beyond its traditional domain of voice over landlines, including high-speed Internet, video and other new telecommunications options.
Entwistle is close to completing his mission to cut 6,000 workers. He’s also on track to trim about $500 million in annual costs. As for his visions of growth, Entwistle is also sticking to the plan, despite a turbulent telecom market in the first few years of this century that is only now beginning to calm as the Canadian economy booms.
Unlike rival Bell, which generally tries to be all things to all people, under Entwistle, Telus takes a more rifle-shot approach. It will only provide services that will make money, such as its recent focus on providing television (TelusTV) over phone lines, and leaves the low-margin stuff to others. An aspect of this strategy played out last year when Telus made a move on the Fido cell network, even though it probably didn’t want the company.
The move put Fido into play and soon the company was swallowed by Rogers Wireless. The process eliminated an annoying competitor that was undercutting the market through its constant discounting.
Outlook
Back in 2002, Moody’s Investor Services, the well-known bond rating agency, decided that Telus’s $9-billion debt called for a downgrading of its credit rating to the “junk” category.
The company’s debt has since climbed back from the credit basement and now occupies the first floor. If Telus continues to perform like it did last year (double-digit growth in wireless subscribers and increased earnings per share of 24 per cent, which shrank its debt), Telus could soon book into the penthouse.
Its stock continues to climb as it systematically solves problems. Languishing on the TSX in 2002 in the $5 range, it’s now hovering around $47. If it meets ambitious growth targets for 2006, there’s no doubt the uphill climb will continue.
___________________________JOE HOUSSIANCEO, Intrawest Corp. (Top 100 Rank: 14)
Challenges
In the ’80s, Vancouver’s Intrawest was a real estate company. Today, it’s a destination resort and adventure travel company, employing some 28,000 people and welcoming eight million skiers, snowboarders, golfers and other guests annually at its 11 resorts across North America. Listed on both the NYSE (IDR) and TSX (ITW), Intrawest is North America’s largest ski-resort operator, with a market capitalization of $1.8 billion. In 2005 it posted revenues of US$862.5 million and profits of US$32.6 million.
Intrawest has evolved into a huge organization supporting two divisions and a number of different business units. By 2005, the company had become a retailer of sports gear, a housing developer, a resort owner and manager, and a luxury adventure travel agency. The diversity confused analysts and investors, who were unsure how to value the company. It also poses a challenge for company founder Joe Houssian, who started in the business by developing Blackcomb Mountain in Whistler. Now that the company has accomplished its “open all-year-round” goal, it must rationalize some of its interests and form a new strategy.
Some of its core businesses are in the path of an avalanche of troubles. Although Intrawest recovered from the post-9/11 travel slump, high energy prices, the rising Canadian dollar and a general aging of the outdoor recreation population are affecting most of its operations. Its signature Whistler-Blackcomb ski operation experienced a four-per-cent decline in revenue last year.
It doesn’t help that a U.S. activist hedge fund is now pushing Intrawest to do something about its stock price sooner rather than later – such as sell the entire company to somebody bigger. The appropriately named Pirate Capital LLC recent¬ly increased its stake in Intrawest and now owns 16.3 per cent of the company. It figures that Intrawest’s stock, which bottomed out at $14 in 2003 but has since climbed to the high $30s, is undervalued. Pirate Capital has made no secret of its desire to see Houssian boost stock prices considerably – right into the $45 range.
Opportunities
The world has changed in the past 25 years. Many ¬mature companies that once ¬focused solely on growth and acquisitions have discovered that managing for a fee is more profitable than ownership. Intrawest has an expertise in many things, but its prime skill is in ¬managing resorts and supplying vacation experiences to millions of rich baby boomers who want one last kick at travel and ¬adventure before they settle into their rocking chairs. If Houssian can move the ¬company into a more managerial mindset, the ¬company can free up capital by selling its real-estate holdings in a hot market, and enter into development and/or long-term management contracts with other giant real-estate companies.
Outlook
Houssian appears to be moving the company in this direction. With deep-pocketed partners, including Manulife Financial, Intrawest has entered into several joint-resort development contracts. Last year it sold a joint development, California’s Mammoth Mountain ski resort, to its partner, Starwood Capital Group Global LLC, which operates Starwood Hotels & Resorts Worldwide Inc.
Industry buzz is that Starwood is the most likely buyer for Intrawest as Pirate pushes to boost share value. Support for the idea no doubt increased when Intrawest retained the investment firm Goldman Sachs early this year to explore various strategic ¬options, one of which was to sell the company. Analysts and the press jumped on the sale option ¬because it’s dramatic and makes for a good story. But they ignored the other half of Houssian’s straightforward comment: that the company had reached a ¬pivotal point and needed to think about where it was going in future. This could, he said, include strategic partnerships or different business combinations.
Houssian might consider an income trust or, perhaps, joint ventures with various groups that would hire Intrawest to manage its resorts, allowing it to be the king of the ski hill again without having to navigate the moguls of real-estate ownership.
________________________PAT JACOBSENCEO, TransLink (Top 100 Rank: 37)
Challenges
Pat Jacobsen, who directs an operation with a budget of close to $1 billion and a $4-billion capital expansion plan, has faced just about every problem a chief can since assuming the helm in 2001.
She arrived in the midst of a bitter strike. It was eventually settled, but TransLink continues to be regularly criticized by the public and politicians. Absurdly high house prices are driving people to buy homes in the extreme suburbs, which means transit users are moving beyond TransLink’s service area, destroying its plan to use public transit to link dense town centres and create a more liveable region.
Every local politician feels he or she has a right to tell Jacobsen what to do. Some would say the ¬governing body of the Greater Vancouver Transportation Authority (the formal name of TransLink) is made up of parochial, small-minded local politicians. A steady shift from an outdated revenue model – direct government support – to a model based on a combination of transit fees, road tolls, fuel taxes and other indirect taxes has enraged sectors of the community.
As head of TransLink, which is charged with planning, funding and delivering transportation within a 700-square-mile region containing 2.3 million people, Jacobsen is responsible for building out the Lower Mainland’s transportation infrastructure for the 21st century. She has to be able to keep her eye on the road while addressing the complaints of backseat drivers on all sides.
Opportunities
Jacobsen is an innovator driven by her vision of an integrated transportation authority as the only way to make sense out of the road and transit monster that has emerged in most cities. And this is exactly the kind of thinking needed to run a sprawling operation like TransLink.
She has a clear idea of her business. The GVTA is not a transportation company, she ¬insists, but a governing and planning agency that contracts out work to other transportation companies, some of which are subsidiaries (the Coast Mountain Bus Company), some of which aren’t (various private firms building roads).
Jacobsen knows her job is to envision, organize and delegate. It’s also to cut the knot of competing local interests and to encourage municipalities to think regionally.
Fortunately, Jacobsen, who is known as being warm and likeable, is also considered one tough cookie and able to tackle the job. (“Let’s just say she has really big cojones,” observes one analyst.)
She is also a veteran of a larger and more error-prone operation: the Toronto transportation system. She logged time as deputy transportation minister in Ontario and gets credit for ramming through construction of the long-planned toll Highway No. 407, which has greatly relieved traffic congestion on Toronto’s parallel main road, the 401.
The highway plan languished for decades as critics insisted that no driver would pay a toll on a road when they could drive for free on the highway next door. But Jacobsen, who believed people would pay for convenience, ignored the critics and has since been validated by the huge numbers of drivers who use the toll road daily.
In B.C. she is well on her way to achieving many of the initial goals TransLink dreamed up when it was formed in 1999, including increased transit use, more efficient use of roads and better funding models. Where others see problems, she clearly sees opportunities.
Outlook
The B.C. government recently initiated a sweeping review of the GVTA governance system, with an eye to changing it so that regional concerns dominate, rather than the usual NIMBY-ism and nitpicking that bog it down today.
This could relieve Jacobsen of some local political meddling, an obstruction to change that has hampered transportation improvements in the region for decades. For example, Jacobsen would like to see a toll road snaking through the suburbs to generate funding and relieve congestion on Highway No. 1, but faces criticism from local residents (much as she did in Toronto).
In her favour, Jacobsen understands change management and that it takes time to institute big ideas. She is prepared to wait it out. As she once said of politics, “It’s a stamina sport and I’ve always been into stamina sports.”
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