At Fortis Inc.’s annual general meeting in St. John’s earlier this month, chief financial officer (CFO) Karl Smith’s delivery of a report on the company’s 2017 and 2018 first-quarter financial performance was concise, direct and devoid — appropriately so — of emotion.
It wasn’t until the end of his brief remarks that it became clear how much emotion was just beneath the surface.
“Before I hand the microphone back to Barry (Perry) I just want to make a personal comment about how fortunate I feel to have spent my entire career at a fantastic organization like … pardon me … Fortis,” Smith said to shareholders, the words clearly caught in his throat, “and how privileged I feel to have been your CFO for the last four years.”
After just over 30 years with the St. John’s-based international utility company, Smith will retire at month’s end. (Current Newfoundland Power president and chief executive officer Jocelyn Perry is taking up the mantle.)
“I’ve been able to have a really, really rewarding career,” Smith told The Telegram this week. “I spent over 30 years with that organization and to be able to spend most of it here in Newfoundland is almost like a dream career.”
It’s not a stretch to suggest that the native of Stephenville Crossing — or the Xing, as it’s affectionately known by past and present residents — played a critical role in the company’s tremendous growth and success in becoming the largest investor-owned gas and electric distribution utility company in Canada and now among the top 15 in North America, with $1 billion in adjusted net earnings in 2017.
“Most of the stuff that’s happened in the history of Fortis over the last 20 years — the growth and the various acquisitions — I’ve been lucky enough to be face and eyes into,” says the 60-year-old father of two.
After graduating from Memorial University with a bachelor of commerce degree in 1981 and obtaining his chartered professional account designation not long after, Smith went to work for multinational accounting firm Touche Ross, which later became Deloitte.
After about five years, Smith took on a supervisory role in the accounting department for one of his audit clients, the Newfoundland Light and Power Co. Ltd., now Newfoundland Power.
“I absolutely hated it,” he admits. “Back in the late 1980s, it was sort of the stereotypical utility: slow, sleepy, engineering dominated and not really commercially oriented.”
He left after about 18 months, but during that time he had crossed paths with Herbert Stanley Marshall, the company’s general counsel since 1979.
Fortis, a holding company founded in 1987 under the leadership of the late Angus Bruneau, was just beginning to take shape around the same time and it was Marshall, then vice-president of corporate affairs, who contacted Smith, asking him to come back to the fold.
“I said, ‘I would, but on one condition: that you don’t send me back into Newfoundland Power,’” he recounts with a laugh.
Marshall kept his word and Smith was put to work assisting the company as it began to expand its portfolio with the acquisition of Water Street Investments Inc. and Newfoundland Building Savings and Investment Ltd., which became corporations known, respectively, as Fortis Properties and Fortis Trust. (The latter was sold to Scotiabank in 2001, and Fortis divested its commercial property and hotel line in 2015.)
“Back then Fortis was seven or eight people making up the rules as we went and doing what we thought made sense without the trappings of a large corporation, where we are today. We always aspired to be where we are today, but back in the early days we did a lot of little things, too.”
Before long, though, Marshall sent Smith back to Newfoundland Power, this time in the role of vice-president finance. It was time, Marshall told him, to change the fabric of the utility and make it more modern and efficient.
“Back then it was me and all the other executive, and you can imagine how they felt with this young whipper-snapper being sent in to stir things up,” he says, noting they all became good friends.
Back at Fortis, Marshall was leading the company in its first push into markets outside the province’s borders — acquisitions of equity in Maritime Electric, followed by Canadian Niagara Power, both of which Fortis now fully owns — and in 1999 he brought Smith back to serve as CFO.
Looking back, Smith says it was exciting and dynamic to be part of the fast-growing company, especially in 2003 when it spent $1.4 billion on Aquilla Inc.’s utility interests in British Columbia and Alberta, more than doubling the size of the company.
“That was the start of the upward trajectory to becoming the huge organization that we are today,” he says.
Smith went back to Newfoundland Power in 2004, this time as its president and CEO, a position he held until 2007, when he was promoted to president and CEO of FortisAlberta, where he spent seven years.
After Marshall left the company in 2014 and former CFO Barry Perry ascended to the top spot, Smith returned for his second stint as Fortis Inc.’s CFO with the express intent of staying on for four years, which comes to a close May 31.
Because there was a clear expiration date, Smith says leaving the organization that has employed him for so long hasn’t been as tough a pill to swallow as some might expect.
“I feel I’ve had a great run, I feel like I’m going out on top and because I love the organization so much I’m going to make sure that the transition is appropriate,” he says. “Everything came together at the right time, so it’s a perfect nexus for me.”
Leaving Fortis may be a retirement in one sense, but Smith isn’t ready to ride off into the sunset just yet — unless, of course, it happens to be on his bicycle. (He’s a former triathlete who now has an avid interest in cycling.)
While he’s looking forward to not being a slave to his calendar, travelling less and sleeping in his own bed far more often that his schedule currently allows, his intention is to turn more of his attention toward community-minded initiatives.
He’ll continue as a member of MUN’s faculty of business administration advisory board and the board of Junior Achievement Newfoundland and Labrador, while also continuing to support Young Adult Cancer Canada — but he doubts he’ll ever top his Shave for the Brave fundraising record of $116,000 set last year. He’s also getting involved with Dr. Andrew Furey and Team Broken Earth.
There are also a few small business ventures, including one with Mallard Cottage co-owners Todd Perrin and Stephen Lee to establish a butcher shop and café at the old Healey’s Pharmacy location on the west end of Water Street.
“In my retirement, I want to hang out with the cool kids,” he says. “People like that, very energetic, really good at what they do, that could probably use an old buffalo around from time to time, and I’m not afraid to put some capital into these things as well, and I’m in a luxurious position to be able to do that.
“Almost like a hobby rather than something that’s going to provide a living. That’s not what I’m interested in. I’m interested in the cool factor.”
He’s entertaining offers to sit on governing boards for a couple of companies, but it won’t be anything near the scale of Fortis.
“I don’t want to sit on a board of a huge organization like we are, for instance, and all the governance trappings that come along with that. But the right people and the right type of business … I’d be interested in doing that.”
Whatever he does, he knows the company that he gave so much to and was just as rewarding in return will always be dear to him.
“I’ll always be very closely connected to Fortis. It’s a huge part of my life.”