The education of Barry Perry, Atlantic Business Magazine’s CEO of the Year
IT WAS THE CLASSIC Newfoundlander-went-away-and-became-a-success dilemma.
Should Barry Perry return home for one of the plummiest of plum finance jobs in his native province, even if the actual role he’d been offered seemed no more challenging than the position he now held, and even if the compensation package would work out to be roughly the same as what he was making today? Or should he remain in his current comfortable perch in Montreal, where he was vice president and treasurer of Abitibi Consolidated, spinning his career wheels in a hereand- now position he’d already begun to find “monotonous” but where he was still a key cog in an international company that offered potentially limitless career prospects—somewhere down the road, somewhere in the world?
I was not overly excited,” Perry admits today of the call he received in 2000 from the corporate head hunter. Would Perry be interested in becoming the chief financial officer for Newfoundland Power Inc., his home province’s venerable primary electrical power utility?
He was 35 years old. He’d spent the last dozen years constructing and consolidating the building blocks for a successful future in corporate finance. He’d survived five years doing the daily, down-and-dirty, meet-the-payroll scramble as corporate controller at an essentially bankrupt company; traveled the world to places he’d never known, making deals and friends as the Newfoundland-based chief financial officer for an independent business unit in what had been the world’s biggest newsprint producer; and then slipped seamlessly into his head office vice president’s chair in 1997 after Abitibi-Price married Stone Consolidated.
If his day-to-day duties with Abitibi didn’t get his blood flowing as fast these days, Perry would be the first to admit his three years in Montreal had not been wasted. “I got valuable experience in capital markets,” he says now. “It was a good foundation.” Although he was more than ready for a next step of some sort, he says, “I was also happy where I was.”
Having balanced and counter-balanced his ambivalences, Perry was about to tell the head hunter thanks, but no thanks, when his wife Nadine intervened.
During his years of corporate ladder-climbing, including the family-changing move away from their Newfoundland roots three years before, Nadine “had never pushed for me to do anything,” allowing his career path to drive their life decisions. Now, she said simply: “Take a look at it.”
He did. He and Nadine had two young children. They had family back on the island they didn’t get to see nearly often enough. Perry himself never felt as at home as he did in the rural Newfoundland of his childhood.
He applied for the job. “They offered, and I said yes.”
It’s worked out pretty well. Eighteen years later, Barry Perry is the president and chief executive officer of Fortis Inc., the St. John’s-based parent company of the regulated Newfoundland Power utility he joined in 2000. Over those years, Fortis— which began in 1987 as a modest holding company set up to expand and diversify its Newfoundland Power asset—has become one of the top 15 utilities in North America with CAD $49-billion worth of assets and 3.2 million customers in Canada, the U.S. and the Caribbean. In 2017, it racked up CAD $8.3 billion in revenue and nudged past the $1-billion mark in adjusted net earnings for the first time in its history.
Perhaps not surprisingly, and at least partly in recognition of those singular accomplishments, Barry Perry was named Atlantic Business Magazine’s Atlantic Canada CEO of the Year at a gala event in Halifax in May.
You can go home again.
Barry Perry’s first home was in Pound Cove, a tiny, 200-inhabitant fishing community northwest of Bonavista Bay on Newfoundland’s east coast, four highway hours and a psychic world away from downtown St. John’s. The Perrys, who hailed from the West Country of England, had been settled in Newfoundland for “probably 150 years” by the time Barry was born into the clan in 1965.
Barry’s father worked as a cook for Bowater until he lost his leg in an accident in 1961, four years before Barry was born. After the accident, he scraped by on odd jobs, including one in a nearby seniors’ care facility. For most of Barry’s growing up years, his mother was a stay-at-home care-giver. No wonder. Barry was the sixth of the couple’s nine children: five girls, four boys. At one point, the entire family, including his grandparents, all lived together in one modest four-bedroom home. “My parents had one bedroom, my grandparents another.” He and his eight siblings got to share the remaining two bedrooms.
As a CA, I was making $35,000 a year. The job at the refinery paid $45,000… I could have stayed, but I couldn’t figure out how to turn down that much money.
They were not rich. “We picked blueberries and sold them to make money to pay for our school clothes,” he recalls, calling it “a life lesson about the value of money, and what parents do to help their kids have a fighting chance.” His own first paying job was cutting the tongues out of codfish and selling them for a dollar a dozen.
University became his escape from a future life like that of the present for his parents and their neighbours. None of his siblings graduated from college. Nor did most people in the communities around them. When he graduated from Bonavista high school after Grade 11, Barry remembers, “there were 60 students. Only two or three went on to college.” One of those became his roommate at Memorial University of Newfoundland.
By the time Barry arrived at Memorial as a just-turning-17- year-old, he’d only ever been to St. John’s a few times “to visit my aunt,” and had never once traveled outside his home province. University was a culture shock. “In those days, you’d only go home once a term, with perhaps a phone call every couple of weeks.”
He was a good student, but not a great one. “I was balanced,” is the way he puts it now. In the beginning, Perry toyed with the idea of becoming an engineer, “but I ran into some tough physics courses and I thought, ‘Enough of that.’”
After that, his academic focus became business. “I was very good at math,” he remembers. In just his second year, he enrolled in one of the department’s toughest economic courses—a compulsory course students would delay taking as long as possible and then “have to take it five or six times in order to pass”—and aced it.
Perhaps the best thing about business school for a poor kid from rural Newfoundland, however, was Memorial’s focus on co-op education. Students spent every second semester getting experience—and earning income—working in their field. Thanks to his math skills, Barry landed his placement at a small local accounting firm. He did well enough there that he continued to be invited back, even as the firm itself was swallowed by Clarkson Gordon and then merged into Ernst & Young. After he’d graduated and earned his chartered accountant designation in 1988, Perry’s career trajectory seemed fore-ordained.
But then his manager at Ernst & Young took a job as chief financial officer at Newfoundland Processing Inc., the then still-controversial Come By Chance oil refinery. Would Perry be interested in becoming the company’s corporate controller?
That calculus didn’t require a math whiz. “As a CA, I was making $35,000 a year. The job at the refinery paid $45,000… I could have stayed [at Ernst & Young], but I couldn’t figure out how to turn down that much money.” (Thirty years later, Perry’s compensation, including bonuses and stock options, tops $1.5 million a year.)
Come By Chance became… Barry Perry’s post-graduate education. The refinery was one of Joey Smallwood’s larger than life, legacy industrial development dream megaprojects. It had been built in the early 1970s by a swashbuckling New York financier named John Shaheen. To mark its official opening in 1974, Shaheen chartered the Queen Elizabeth II luxury liner to ferry 1,000 bejeweled guests from New York to Newfoundland for a splashy celebration. But the project was burdened by too much public funding and too little private investment or expertise. Two years on, the refinery went spectacularly bust in “one of the single largest bankruptcies in Canadian history.”
By the time Perry arrived at Come By Chance in 1989, its operations—and fate—were in the hands of Demetrios (Jim) Haseotes, a New England entrepreneur with almost as outsized dreams.
Haseotes, Perry says, had a vision of becoming a “kind of Irving.” He’d bought the mothballed refinery two years before for one dollar with ambitious plans to use it to supply a network of more than 500 Chevron and Gulf service stations he’d scooped up the year before at almost-as-bargain bargain basement prices. Those new assets were to be tied together and vertically integrated into his already highly successful flagship American convenience store chain, Cumberland Farms.
It didn’t turn out exactly as planned. Crude oil prices tumbled, and the refinery began losing money on every barrel of oil it produced. Suppliers demanded payment of their invoices at times when there was no money to pay them—not and meet the refinery’s payroll at the same time. “It was stressful,” Perry admits. “You were always dealing with suppliers, managing relationships.” Unpaid suppliers; unhappy relationships. He laughs. “In five years, I gained 15 years’ worth of experience.”
Working at the refinery was a family affair. Perry’s wife, Nadine, whom he’d met at university, was the “only sister in the union,” he jokes. They settled in Clarenville, a thirty-minute drive from the refinery. “We liked Clarenville,” he says simply.
He learned plenty. “It was a great experience early in my career,” he says. “I learned how the energy business works. I understood its capital requirements, lessons that were fundamental for me as I continued in business.” But juggling financial firecrackers on a bankruptcy tightrope was a young man’s game. He was 29. And he was ready for a new challenge.
Ironically, Perry learned about his next job—at Abitibi-Price—from a manager there whose relationship he’d had to manage. The refinery supplied Bunker C fuel to Abitibi, which meant Perry had been forced to occasionally sweet-talk managers there into paying their invoices early so Perry could make the refinery’s payroll.
Now one of those managers told Perry that one of Abitibi’s international business units (the Newfoundland-based unit responsible for all newsprint shipped outside North America) was looking for a CFO. Few of the company’s Manhattan-based corporate types, who might have been expected to apply for the job, were keen to leave the Big Apple for what they saw as the Big Nothing, they told him. “So I threw my hat in the ring.”
Come By Chance’s Haseotes did his best to change Perry’s mind. “If the refinery closes,” he told him, “I’ll bring you to Boston.” (The refinery was sold later that year, ere are retiring with their full pensions now.”) But, as for himself, Perry told Haseotes at the time: “I need to do this.”
His new office in Grand Falls was a relic from the glory days of the pulp and paper industry. “The offices were huge, and the walls were all wood-paneled.” As chief financial officer, Perry merited the second largest office in the building. Not that he was there often. He had three bosses—mill managers in Grand Falls and Stephenville, as well as a sales manager in New York City whose territories included all of Latin America. Not to forget Abitibi’s other international sales office in London, which serviced Europe and Asia, and demanded his time too.
Perry spent a lot of time on the road, not only flitting from one office to the next but also traveling to China, Brazil and Korea on company business. Not bad for a guy who’d never left his home island until he was in his twenties.
“It was a good step for me,” he says now. “Abitibi was a big public company and I got the opportunity to learn a lot.” But three years into that job, the company merged with Stone-Consolidated, a Montreal-headquartered forest products company, to form Abitibi Consolidated. Largely because of Stone’s Quebec assets, the new board decided to base the new corporate head office in Montreal. As had been the case with Perry’s last opportunity for advancement, many of those in Abitibi’s Toronto headquarters—who would logically have had first call on jobs in the merged head office—“were not keen to move,” Perry says. “So I put my hand up.”
After eight years in an operational finance role at the refinery and mills, “I had to go back to my CA Handbook, to my Accounting Principles.”
Three years after that, the headhunter called.
On the surface, Barry Perry’s job as vice-president finance and CFO at Newfoundland Power wasn’t a significant career step forward. But it did allow him to learn the ins and outs of how regulated utilities work, and—most important—offered him a chance to begin his personal post-doc studies in growing and expanding a business.
In 1987, the shareholders of Newfoundland Power (née St. John’s Electric Light company back in 1885) had voted to transform the utility into a wholly owned subsidiary of Fortis Inc, a new holding company they had created specifically for the purpose of leveraging Newfoundland Power’s assets and expanding and growing the business.
By the time Perry joined 13 years later, Fortis had still barely begun to dip its toe into the waters of corporate expansion, buying Prince Edward Island’s Maritime Electric and investing in utilities in Ontario, Belize and the Cayman Islands.
Stan Marshall, a lawyer-engineer who’d come up through the Newfoundland Power and Fortis ranks and been appointed president and CEO in 1996, was keen to goose the growth process along. But Fortis itself had few resources to dedicate to expansion. “The Fortis head office was, maybe, 10 people,” Perry remembers, “so they needed the support of their subsidiaries.” Luckily, Marshall invited Perry to work with the parent company on making those mergers and acquisitions happen more quickly.
I couldn’t be where I am today without Stan (Marshall). He gave me an extremely long leash and allowed me to do so much: mergers and acquisitions, sit on boards…
In September 2003, Fortis surprised the markets by announcing it had struck a CAD $1.36-billion deal with Aquila Inc., a debtbloated American utility, to acquire two utilities it owned in British Columbia and Alberta. Fortis not only paid above book value for the companies but, as the Globe and Mail tut-tutted at the time, Fortis’s plan for major capital spending programs at the two utilities meant “the acquisition is not expected to add to share profit until two years after the deal is officially closed. Perhaps not surprisingly, Fortis stock nosedived more than five per cent the next day.
“People thought we overpaid,” shrugs Perry, who spent more than a month in Calgary doing due diligence on the deal. He makes no apology. “We bought it for a billion,” he acknowledges, then adds: “It’s now worth between $5-6 billion, and it played a big part in Alberta’s growth.”
The deal also meant Fortis had instantly grown its own customer base to 900,000, increased its assets by 75 per cent to more than $3.6 billion and expanded its corporate and brand footprint (the utilities were renamed FortisAlberta and FortisBC) to include five Canadian provinces plus the Caribbean.
Thanks in no small measure to the “cascading” corporate fallout from that deal—“my boss went out west” to take a position with one of the newly acquired utilities, Perry says—he himself moved over to Fortis head office as its vice president and CFO in 1994 and began to “work directly with Stan.”
Four years later, they swooped in and gobbled up Terasen Gas, a company supplying natural gas and piped petroleum to 95 per cent of gas customers in British Columbia. Terasen Gas had been part of Terasen Inc., which Houston-based Kinder Morgan had acquired in 2005. “We knew Kinder Morgan wasn’t interested in Terasen’s gas business.” In reality, they were most interested in the pipeline prospects of Terasen’s 4,300 kilometres of natural gas pipelines. So Fortis made an offer—CAD $3.7 billion—for the gas distribution part of the business, which Kinder Morgan did not refuse.
“We closed the deal in less than 90 days.”
By the time that deal was done, Fortis Inc. had not only become the owner and operator of the third largest gas distribution franchise in Canada, but it had more than doubled its customer base to 1.9 million while almost doubling its asset base to $8.9 billion.
Not bad, but no American cigar.
Even after the first Alberta and B.C. acquisitions, recalls Perry, “Stan didn’t feel there was a lot left in this country.” The United States market was the real prize.
Perry tried to win it. In 2005, he became the Fortis lead in a bid to buy NorthWestern Energy—“one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving more than 628,500 customers in Montana, South Dakota and Nebraska”—but fell short when he was outbid by Australia-based Babcock & Brown Infrastructure.
Perry was devastated. “I remember Stan coming up to me and saying, ‘What’s your problem?’ I said, ‘We’ll never get another chance like that.’ He just laughed.” (Ironically, the Northwestern/Babcock & Brown deal never did close. In 2007, the Montana Public Service Commission quashed the sale, which it said offered “no tangible benefits to the ratepayers but puts them under much more risk.”)
By then, however, Fortis had moved on. Three months before the Public Service Commission’s negative decision, Fortis acquired—and was still digesting—Terasen Gas.
Not that it didn’t continue to be interested in the U.S. market. “We plugged away,” Perry says.
In May 2011, 10 years after it had first targeted American expansion, Fortis finally established what appeared to be a utility beachhead, offering to buy Central Vermont Public Services, the state’s latest electric utility with 160,000 customers, for $470 million.
Though not nearly as jaw-dropping a price as some of its earlier acquisitions, there were again those who fretted Fortis had offered to pay too dearly. One analyst told the Globe and Mail the price was “lofty;” another described it as a “sizeable premium” for Central Vermont shareholders.
But Chad Friess, a BS Securities Canada Inc. analyst, may have come closest to the most important reality about the deal. Besides “organic growth opportunities, which [Fortis] believes will drive annual rate base growth of nine per cent through 2015,” Friess wrote in a report to investors, “we believe this initial foray into the U.S. utility sector will serve as a springboard for further accretive deals of regulated assets. Assuming [Fortis’s] strong organic growth outlook is preserved, we see little risk to valuation.”
That was indeed the plan. But all those win/lose calculations turned out to be premature when Central Vermont ditched Fortis at the altar less than two months later, catching the bouquet of a “superior” offer from Quebec-based Gaz Metro.
Back to the growing board.
“Sometimes, I get tired just thinking about it,” Perry admits with a laugh.
A year later, Fortis did finally consummate its first American deal, acquiring the CH Energy Group of Companies, the parent company of New York State gas and electric utility Central Hudson for US $1.5 billion. That was followed a year later by the purchase of Arizona’s UNS Energy for $4.3 billion.
It was time to pass on the Fortis corporate baton.
I’m from Newfoundland, so I have no plans on going anywhere and it won’t happen under my tenure.
After 35 years, 15 of them as president and CEO, Perry’s mentor, Stan Marshall, retired at the end of 2014. Although the Fortis Board had recognized early on there was no need to look outside the company for a successor—there were a number of good candidates from within—they did hire an advisor to evaluate possible successors and recommend one. He recommended Barry Perry, and the Board quickly agreed.
“The transition was seamless,” Perry says, adding, “I couldn’t be where I am today without Stan.” Following his work on the Aquila acquisition, Marshall had made him the “lead” on all future mergers and acquisitions. “He gave me an extremely long leash,” Perry says, “and allowed me to do so much: mergers and acquisitions, sit on boards…”
For his part, Marshall was just as effusive: “Barry brings a continuity of strategy, culture and values shared by our Board, senior executive team and across our organization,” he said at the time.
Barry Perry wasn’t the only one who benefited from Marshall’s tutelage: “he let the folks who worked for him do things,” Perry says admiringly. Now Perry tries to do the same, making sure that, in spite of the fact our interview is focused on his role, I understand that he’s merely “part of a very good team here.”
Just over a year after Barry became Fortis president and CEO, the team announced its largest, most stunning and far-reaching deal ever: it agreed to pay US $11.3 billion for Michigan-based ITC Holdings Corp., the largest independent electric transmission company in the United States with high-voltage transmission facilities in seven midwestern states.
The deal not only instantly transformed still-St. John’s-based Fortis into the 13th largest transmission and distribution company in North America with 60 per cent of its assets now in the United States but it also solidified the company’s decision to list its shares on the New York Stock Exchange—a logical next step in broadening its investor pool and growing the company.
On October 14, 2016—four days after Fortis officially closed its deal to buy ITC—Barry Perry traveled to New York to ring the Stock Exchange bell to ceremoniously mark the beginning of the day’s trading.
“It’s the most prestigious stock exchange in the world and it introduces Fortis to the capital markets in the U.S.,” Barry explained to CBC’s The St. John’s Morning Show. “So that’s important.”
What about Fortis’s future, queried the interviewer? Would it—like Newfoundland-based Canadian Helicopters Corp. (CHC), which listed on the NYSE in 2014—now move its head office outside the province too?
Barry Perry was unequivocal. “I’m from Newfoundland,” he said, “so I have no plans on going anywhere and it won’t happen under my tenure.”
You can stay home. Again. Still.
It’s less than a week since the Halifax gala at which Barry Perry was announced as Atlantic Business Magazine CEO of the year, and he is still coming to terms with his newfound celebrity. “I just got back from a ‘Top 40 Under 40’ event,” he tells me. “I’m on their advisory board. When I was there Brett Wilson from [CBC-TV’s] Dragon’s Den came up to congratulate me. I had no idea, but apparently he was in the audience that night.”
These days, Perry’s corporate focus is on preparing for a summer board meeting that will shape Fortis’s strategy for the future.
Having cemented its place in the North American utility business with the acquisition of ITC, Perry thinks it may be time for a pause, investing instead in upgrading its existing infrastructure to respond to the ongoing transition in the U.S. from coal-fired electricity generation to natural gas, renewables, even solar power. The company has already committed to spend $3 billion a year for the next several years doing just that.
“There’s less risk,” Perry notes. “You’re not paying the premium you do when you acquire a business. We paid a premium when we acquired ITC, and that premium had to be borne by shareholders. It’s nice to have a business that’s growing nicely on its own.”
That’s not to suggest, he says, that Fortis won’t continue to be a buyer. The problem these days is that there’s less worth buying. Thanks to mergers and purchases, the number of investor-owned utilities in the United States has shrunk “from 100 to around 40. Some of those are just too big to be targets for us, and some are too small and not worth the effort. There’s only a few in the middle,” he explains. He adds he’s “not anxious” for Fortis to venture into European acquisitions. “It’s tough enough to run a business in 17 [North American] jurisdictions… At some point, we’ll grow again by acquisition. But we’ll be selective about it.”
One small way in which the company could grow, however, is in its home province. Newfoundland Power, he notes, now makes up less than three per cent of the company’s overall assets. “During my tenure,” he says, “I’d like us to own more Newfoundland assets.”
Which could help justify Barry’s corporate decision to keep the company’s head office in St. John’s. “Having our head office here,” he tells me, “is special. It keeps us grounded.”
Barry Perry too.
Despite his hectic international travel schedule, “I try to be home on weekends.” He has a cottage on the water in Port Blandford just south of Terra Nova National Park and a two-hour drive from St. John’s. “We like boating, recreational cod-fishing,” he tells me. “And I just bought a wood chipper. It’s a mindless activity, a way to relax.” He pauses. “If you were to see me [at the cottage],” he suggests with satisfaction, “you wouldn’t know who I am in the office.”
Barry Perry has come home again.