The Last Canadian Knight

by Gordon Pitts

  Ann consented, and so did Cadbury Schweppes, which agreed that a non-executive chair’s job would not distract him too much, and there was this obligation of public service. The next day, he told Wakeham: “John, if I’m going to cave in, I’d just as soon do it to you and not the PM.”

  Meanwhile, the media were intrigued by Day’s frenzied ubiquity, landing in one difficult job after another. The day after he took on the PowerGen chair’s role, Charles Leadbeater, industrial editor at the Financial Times, commented: “One of the most intriguing questions posed by yesterday’s upheavals at PowerGen, the electricity generator, is how many days does Sir Graham Day have in his week? Over the past eight years Sir Graham has developed an increasingly bewildering juggling act of top jobs in British industry.” Leadbeater proceeded to list Day’s array of roles: chairman of Rover and Cadbury Schweppes, deputy chairman of MAI, the media and insurance broking group, as well as a non-executive director at British Aerospace and at Thorn EMI, the media and entertainment company. “At first sight, running a confectionery and soft-drinks company or restructuring ailing British manufacturing companies…would not seem to be ideal qualifications for the top job at the nation’s second-largest electricity generator,” Leadbeater noted. “Yet for most of his career Sir Graham has worked in the grey zone between politics and business. His experience in dealing with privatisation will be one of the greatest assets he will bring to PowerGen.”

  In the end, the share offering was an unqualified success. In Day’s view, PowerGen, now free of state ownership, became much more efficient. The chairman’s job became straightforward, as Day worked with a CEO who understood operations but lacked corporate experience. Day and the board filled in the gaps. It meant, however, that Day would cross swords with Michael Heseltine, the fiery politician who had seized the mace during the Shipbuilders vote and was now environment minister. The two men clashed over the role of coal in PowerGen’s mix of energy sources. “I kept the management away from this and dealt with him,” Day recalls. In his dealings with Heseltine, Day says he found the cabinet minister to be arrogant, aggressive, and often lacking command of the facts.

  The diversions into Britain’s corporate world would only intensify. Day was home in Nova Scotia for Christmas in 1989 when he got a phone call from fellow directors at British Aerospace. Was he aware of secret discussions that chairman Roland Smith was conducting about merging BAe with another British company? Day said he was not. The upshot was that the board wanted Smith out. The government still had an interest in the future of BAe, and agreed with the directors: Day would succeed Smith as chair.

  Day knew Smith well. The two men had been instrumental in joining Rover Group with British Aerospace. Smith was a prime mover in the diversification of BAe, but he was a lone wolf who did not appreciate the nuances of corporate governance. The company was reeling from a badly botched public rights issue, and then the board had discovered that Smith was having secret talks without keeping it informed. With the approval of Cadbury, Day agreed to serve through the inevitable crisis that would hit BAe shares and until a “permanent” chairman suitable to the board could be recruited.

  The company faced a brace of challenges arising from the Gulf War of 1990–91 and from its shareholding in Airbus Industries and the complexities of being a significant arms manufacturer. Smith’s dismissal put pressure on the share price because the company was constrained in what it could say about his departure. Also, the British conglomerate General Electric Co. (GEC, not to be confused with US-based General Electric) was sniffing around, and the government was concerned about BAe’s financial exposure.

  Day visited major institutional shareholders, explaining what had happened, without implicating personalities, and stressing that the company operationally was sound. Once again, his mere reputation was a factor in cooling rumours and easing pressure on the shares. GEC did not move against the company, although it would have been easy to do so. Day had several conversations with the GEC chairman, the wily empire builder Lord Weinstock. In time, the BAe share price recovered, a successor chairman was found, and Day was able to resign as chairman and as a director.

  It was all very satisfying because these assignments had real value, but any hope of a more relaxed lifestyle went out the window. For about two years, as the jobs piled up, Day worked harder than ever. He had three London offices—Cadbury, near Marble Arch, British Aerospace on the Strand, and PowerGen in the City—but he did most of his work in his car, moving from one place to another, sharing the vehicle with a secretary and Jeff Stubbings. For several months, he never had more than five hours of sleep a night.

  Ann Day was worried. She knew her husband needed sleep or he got twitchy and unhappy. That was his state for nine or ten months. She kept wondering when it was going to end. If Graham got to sleep at night, he was usually fine for a good night, but getting to that point was a challenge.

  In time, Day concluded that Dominic Cadbury should succeed him as chairman of the chocolate and beverage company. He handed over the reins in 1993, a year earlier than originally agreed. There was no value in continuing. Dominic was ready, and he had successors from which the board could choose to replace him as CEO. “Too often, I have observed senior people outstaying their time and role. I was determined never to be one of those and I never have,” Day says. “I have no patience with people who have to have their fingers pried off the desk. Ian Sinclair should have gone at least five, maybe ten years before he did.”

  During Day’s period as chairman, Dominic Cadbury says, “we prospered as a public company, and that five years was a very critical time. That was the time when, from my perspective, we were most vulnerable. By the time he left, we were in pretty calm waters. The performance had been sustained, we had got rid of General Cinema, our results were good.”

  Day is proud of his work with Cadbury, particularly in keeping a great company from falling into raiders’ hands. But the family shareholding continued to slide. The shareholder group became dominated by investors with no personal links to the company. “The Quaker voice no longer held sway in the boardroom,” Nancy Cadbury writes. That became evident as Dominic himself left the board in 2000, and pressure mounted from activist investors to enhance shareholder value. In 2007, the company split off Schweppes into a separate entity. That left the core chocolate company vulnerable. In August 2009, the US food conglomerate Kraft launched a takeover bid and, after some back-and-forth, the Cadbury board surrendered to an improved offer. It was the end of the independent company.

  The Cadburys, now gone from direct involvement, were horrified as Kraft and its spin-off successor Mondelez were widely seen as cheapening age-old processes. In March 2016, I interviewed Dominic in his London townhome, the day after he had, with sadness, watched a TV documentary outlining the dispiriting litany of offences: changing the formula for the Creme Eggs, closing a British plant and outsourcing its production to Poland, ditching the company’s beloved chocolate coins. The company had even ended the tradition of the gift of chocolates at Christmas to long-term company pensioners.

  For Day, there was a particular sadness in all this. In his opinion, the surrender to Kraft was a case of excessive timidity. “I believe the board didn’t have the guts to find another way. Not everybody is prepared to fight, or have a plan to be bloody mindedly determined.”

  Not like Graham Day.

  Chapter 15

  Homecoming

  On November 28, 1990, Graham Day was a passenger in a car heading north on the M1, the spine of expressway that extends up the middle of England. His driver and security person Jeff Stubbings was at the wheel, and they were en route to a private girls’ school in the West Midlands, where he was to give a talk.

  A call came in from his executive assistant in London. “Do you have the radio on?”

  “No,” he said.

  “She’s gone.”

  No one had died, but an era had: Marga
ret Thatcher had been turfed out by the Conservative MPs she had led to power eleven years earlier, changing the face of the country by rolling back the powers of the state.

  Having digested that information, Day arrived at the school and was greeted by the scene of many of the adults—school mothers and grandmothers—openly crying. As he spoke to the students, he discarded his planned script. He talked to them about Thatcher and what she meant as a role model for young women, and he too was caught in the emotion.

  There were many actors in the overthrow of Margaret Thatcher. The leadership vote was driven by her long-time nemesis, Michael Heseltine, he of mace-wielding theatrics during the Shipbuilders nationalization. Heseltine’s decision to oppose her in the caucus vote set off a full rebellion that ultimately made John Major her successor. But the turning point had been a devastating speech by Geoffrey Howe, the beaten-up former Thatcher ally who had resigned in sadness and anger at her uncompromising stance against a British role in monetary alignment in Europe—in retrospect, probably a wise position.

  Below the surface, the underlying factor was Thatcher’s harsh treatment of the people around her. After fifteen years of her leadership, many were just tired of her. And she had broken one of Graham Day’s rules: let go of power before it lets go of you. Day felt that Thatcher didn’t go out of her way to be hurtful, but she wasn’t necessarily sensitive to her senior people’s feelings. She could be very attentive to the woman who brought her tea; yet, if you were in her inner circle, she felt you were a big boy or girl and could handle a bit of handbagging. Day had felt the sting of her questioning but he learned how to respond. She did not appreciate people who just rolled over.

  Her departure was the beginning of the end of Day’s time in Britain. He had taken on jobs because she wanted him to. He had become much more than a corporate fixer. He had sat on the National Health Service policy board, and helped introduce non-medical business procedures to the service. Later, Thatcher’s successor, John Major, would appoint him as the first chair of the new School Teachers’ Review Body, which makes recommendations on the pay for almost half a million teachers in England and Wales.

  Day learned there had been a history of labour difficulty in education. Under the then-existing agreements, teachers knew what they were paid, but they seldom knew how that pay was determined, except in a teacher’s early years, when pay raises were automatic. Moreover, there were no performance incentives. In his three years on the committee, there was labour peace, the pay metrics were reformed and made known, and pay points for excellence in teaching were awarded. Some say the teachers’ incentive system has been one of Day’s most lasting legacies.

  However, his sense of duty became less pressing. He was basically finishing up matters. With the exception of the Cadbury chairmanship, his important jobs in Britain had flowed from Thatcher’s support and his loyalty to her, and now she was gone.

  One board that did lure him was Thorn EMI, a powerhouse of musical recording under a number of labels, with artists ranging from the Beatles to the Sex Pistols. In the 1990s, it was trying to come to grips with the future delivery of recorded music. Management believed there would be a new development to continue the sequence of 78, 45, and 33 rpm discs, but it did not expect fundamental change. Day was one of two directors who felt there would be disruptive change, and it would be more than hardware tweaks. This continuing difference of opinion helped persuade him in 1998, after nine years, that it was time to resign. Clearly, the company did not anticipate the era of Spotify and iTunes.

  Day’s last remaining British directorship was close to his heart. He had been invited by his friend John Gardiner to join the board of the Laird Group, just as Gardiner had come onto boards where Day was chair. He owed Gardiner a lot, and he continued his involvement for several years after he returned to Canada before concluding it was too much.

  He was paving the way for that eventuality as early as 1989, after he received a phone call from the Bank of Nova Scotia’s City of London office asking if he would be free to meet Cedric “Ced” Ritchie, the bank’s chairman. Day had known Ritchie for many years as a fellow member of the so-called Maritime Mafia, the network of East Coasters who formed one of the most durable business elites in the country. Ritchie’s was a remarkable story. As a teenager in a poor family with a widowed mother, he had applied as a teller at the Bank of Nova Scotia in Bath, New Brunswick, and had risen to the summit of the bank. He dominated it for two decades, outlasting would-be successors and building the bank’s international presence, particularly in the southern hemisphere.

  Ritchie asked if Day would be interested in becoming a director. “Saying ‘yes’ was the easiest career decision I ever took,” Day recalls. Ritchie saw Day as a double threat: a director with considerable international experience and with ties to Atlantic Canada. Ritchie made it clear the job would involve flying regularly to Canada or elsewhere for meetings. Day responded that he would likely return to Nova Scotia in a few years and that he had retained a home (and a Scotiabank account) in Hantsport. Indeed, his father had opened an account with the bank on his arrival in Canada in the early 1920s. (In those days, customers had to write their account numbers on cheques, and he remembers his dad’s number was 333.)

  It was a stage in the circularity of Day’s life, from Nova Scotia boyhood to big central Canadian job to British corporate stardom, and now he was planning to return to Nova Scotia. Day joined the bank’s board, which would be one of his re-entry points to the Canadian business world.

  In his final years in Britain, Day was constantly going home to Canada—particularly to Nova Scotia—to give speeches. One was attended by Allan Shaw, who headed the Shaw Group, a 125-year-old business heavily involved in the construction materials industry in Nova Scotia. Well known for its brickmaking roots and formerly a family business, it was now owned by senior managers. Allan Shaw, the remaining link to the family ownership, knew of Day but had never met him. As he listened to the speech, Shaw thought, “I want this guy to be a director of our company.” Shaw introduced himself, and noted that Day was about to return to Nova Scotia. Would he join the Shaw Group as a director? Day certainly knew of the company. It had been very active in the Annapolis Valley: Shaw Brick had been on hand when, in 1897, the town of Windsor burned to the ground; the Shaw family had bought its first brick-making machine to supply hundreds of thousands of bricks to rebuild the town, and later turned its hand to helping reconstruct Halifax after the devastating 1917 explosion.

  Day agreed to join, and Allan Shaw would be a collaborator in some of his most important roles: on the boards of the Bank of Nova Scotia and Dalhousie University. Meanwhile, the word was getting around that here was a proven director with global stature, and he would soon be returning to Canada. He was experienced, battle proven, and he was one of them.

  Donald Sobey, one of the siblings who ran a successful Nova Scotia retail business, had met Day on a trip to London. They had dined with mutual friends at a nice Italian restaurant where the waiters knew Day and would stop and sing opera once in a while during the meal. On a later trip, Donald had a more serious purpose. The Sobeys owned an insurance company in London that provided reinsurance through British and US underwriting companies. It was not performing well, and Day was asked to be a director. When the British-American partners were told that Sir Graham Day was joining the board, they were impressed. They couldn’t believe they could land a knight as a director. It also paved the way for a reunion of two Dalhousie alumni. In the Sobey family, Donald was the consummate investor while his brother David was the one who liked to roll up his sleeves in the stores. David had known Day slightly as a student at Dalhousie, and was amazed to learn of his career path.

  Even with Day on the board, the Sobeys’ British insurance business was not improving, so the directors gathered to decide what to do. As they prepared to close it down, Day could see one positive side: “Well, we’ll be the ones who turn out the lig
hts.” Day’s being pulled into the Sobeys’ orbit opened up possibilities, as the family expanded the breadth of its businesses and prepared to strengthen its Canadian boards, including that of Empire, the family’s holding company for its supermarket, pharmacy, and other interests. In 1992, Day joined that board as well.

  That same year, as Day was preparing to go home to Nova Scotia, he heard from the province’s premier, Donald Cameron, who had an urgent problem. The province was in the process of privatizing its electricity company, Nova Scotia Power, and it was at most three months away from a massive initial public offering of shares. The province’s investment advisor had informed the cabinet that it could not go to the market with the current board, a group of largely political appointees reflecting the company’s history as a Crown corporation. The premier had to assemble very quickly a business-oriented board that would be acceptable to the market. Day was on his list.

  Day agreed to do it, and derived some perverse satisfaction that among the retiring directors of the former board was his father-in-law, Jake Creighton. The deal got done—a record Canadian initial public offering (IPO) at the time, at over a billion dollars. He would stay on the board through the privatization plus a couple of years. Meanwhile, he made lasting friendships, one with Derek Oland, scion of the Maritimes brewery dynasty, and another with Louis Comeau, the gregarious CEO who led the power company. Comeau, who once had been a Conservative MP and had run the power utility for thirteen years, provided an entry into the world of Acadian society and business. Day became a champion of Acadian institutions.

  As he was facing the end of his time in Britain, Day was mindful of his obligation to Ann, who had dealt with all the moves, the absences, the times alone with the kids. Mind you, she got great enjoyment out of the life they led, and savoured the insight into the British governing classes. But before he took the Rover job, the two had drawn a line in the sand. They would leave when he turned sixty, which would be in May 1993. And 1993 was fast approaching.