There is no substitute for a culture of integrity in organizations. Compliance alone with the law is not enough. History shows that those who make a practice of skating close to the edge always wind up going over the line. A higher bar of ethics performance is necessary. That bar needs to be set and monitored in the boardroom.  ~J. Richard Finlay writing in The Globe and Mail.

Sound governance is not some abstract ideal or utopian pipe dream. Nor does it occur by accident or through sudden outbreaks of altruism. It happens when leaders lead with integrity, when directors actually direct and when stakeholders demand the highest level of ethics and accountability.  ~ J. Richard Finlay in testimony before the Standing Committee on Banking, Commerce and the Economy, Senate of Canada.

The Finlay Centre for Corporate & Public Governance is the longest continuously cited voice on modern governance standards. Our work over the course of four decades helped to build the new paradigm of ethics and accountability by which many corporations and public institutions are judged today.

The Finlay Centre was founded by J. Richard Finlay, one of the world’s most prescient voices for sound boardroom practices, sanity in CEO pay and the ethical responsibilities of trusted leaders. He coined the term stakeholder capitalism in the 1980s.

We pioneered the attributes of environmental responsibility, social purposefulness and successful governance decades before the arrival of ESG. Today we are trying to rebuild the trust that many dubious ESG practices have shattered. 


We were the first to predict seismic boardroom flashpoints and downfalls and played key roles in regulatory milestones and reforms.

We’re working to advance the agenda of the new boardroom and public institution of today: diversity at the table; ethics that shine through a culture of integrity; the next chapter in stakeholder capitalism; and leadership that stands as an unrelenting champion for all stakeholders.

Our landmark work in creating what we called a culture of integrity and the ethical practices of trusted organizations has been praised, recognized and replicated around the world.


Our rich institutional memory, combined with a record of innovative thinking for tomorrow’s challenges, provide umatached resources to corporate and public sector players.

Trust is the asset that is unseen until it is shattered.  When crisis hits, we know a thing or two about how to rebuild trust— especially in turbulent times.

We’re still one of the world’s most recognized voices on CEO pay and the role of boards as compensation credibility gatekeepers. Somebody has to be.

OpenAI a lesson in the dangers of feeble governance

In the fog of uncertainty that surrounds it, one thing stands out about A.I: it cannot be adequately controlled by the traditional corporate governance model. Even before the boardroom implosion at OpenAI saw the ham-fisted ousting of CEO Sam Altman, corporate boards were beginning to look like the Jurassic Park of today’s business. The idea that a small group of people with similar backgrounds and shared mindsets can properly oversee global corporate monoliths by spending a couple of dozen days on the job each year defies any notion of reality or common sense.

Inattentive and out-of-touch boards have been associated with pretty much every major corporate failure over the past hundred years. That tradition carried on with the collapse of Silicon Valley Bank of California this spring, where directors of the bank, like so many before them, professed total surprise at what was happening. OpenAI’s missteps involving its board, and the employee revolt it unleashed, confirm the track record of the dysfunctional board remains unchecked. Boardroom blunders that cause investors to take a hit are bad enough. But when something as profound as A.I. is involved, with its potential to alter virtually every aspect of society, the consequences are unfathomable.

What is needed is a new system of governance, at least for companies like OpenAI, with a wider aperture for ethics and accountability and a smaller appetite for the traditional corporate matrix of success. I’ve been studying boards for half a century. I am as fearful about the implications of a traditional corporate governance model for A.I. as some of its early pioneers are about the impact of A.I. itself. We don’t need more corporate disasters before it becomes obvious that boards that lack cognitive diversity and prioritize shareholder value over social values are unlikely to offer a post-A.I. world the protection it needs.

Diversity also requires imagination, which most boards have not

Boards have another problem besides a flagging commitment to gender diversity (See Spencer Stuart UK report on diversity).  It is their lack of cognitive diversity that continues to hobble corporate governance and lead directors into unexpected minefields. For instance, why did it take 20 female accusers coming forward before one man, Crispin Odey, admitted wrongdoing? And why did the board of his now defunct hedge fund seem so feckless in its ability to act earlier?

The fact is that most directors of top boardrooms are cut from the same cognitive cloth. Being past and current CEOs themselves, there is an occupational tendency for directors to be overly deferential to star CEOs.  This often renders them incapable of entertaining different scenarios, especially if they are unpleasant. One might think the arrival of ESG would broaden directors’ horizons, but what it seems to have done is to create a check-the-box mentality to issues, like advancing gender diversity and curbing sexualized wrongdoing, without any actual thinking going on.

If boards are beginning to pull back from their diversity commitments, as the Spencer Stuart UK report suggests, it is not surprising. Their vision is nearly always limited, shaped by yesterday’s values and concerns, not tomorrows, with an almost universal inability to see themselves and their companies as others see them.

There is a reason why, decades after Peter Drucker made his classic observation on the failure of boards to do their jobs, directors are still often the last to know what is going on and what needs to be done to prevent disaster. It is part of the bigger problem of a lack of different types of directors with a more varied skill set of earned life and business experiences. Put another way, if directors were drawn mainly from the narrow world of concert violinists, nobody should be surprised there is not a lot of rock and roll coming from the boardroom.

Sherritt needs to re-think its corporate governance –a lot

Sherritt needs to re-think its corporate governance –a lot

A few thoughts now on Sherritt International Corp., whose “S” listing symbol on the TSX gives a glimpse into its once storied place in Canadian mining. There was a time when the company was worth billions and was a member of the S&P/TSX composite index. With those days long past, it’s worthwhile to examine some of the corporate governance practices of this penny stock company.

I realize executive compensation at Sherritt has received passing marks from some proxy advisory firms and has won approval by shareholders under the say on pay provision. The Finlay Centre for Corporate & Public Governance has been asked by several shareholders to take a second look owing to the company’s history and underperformance. We think there are some points worth making.

The three-member compensation committee seems weak. It has two members who are in the business of consulting to other mining companies. Where they stand on CEO pay can have an impact on that business. Their bios claim experience in compensation matters. But they don’t say how. The explanation for CEO pay is gobbledygook to most readers. It defies rational analysis by anyone who doesn’t have a PhD in physics, which is why it is presented this way. I say physics because of the unusual gravitational force in CEO pay that pushes it up and up with little explainable justification. Confusion, not clarity, is the goal. I have been pressing US regulators to take action to demand simpler and more readable explanations for the past 10 years. The Ontario Securities Commission is nowhere on that page.

So, for a company whose stock has been languishing around 46 cents, and has reached a high of only 63 cents briefly in the past year, Sherritt’s seven outside directors were paid an average of $276,038 for 11 board meetings and occasional committee meetings that would have occurred the same day. That’s not a bad gig. The compensation committee met six times. In that time, they decided Leon Binedell, president and CEO since 2021, perfectly met all targets and was fully entitled to $2,649,975. What do you suppose that figure represents in comparison to the median Sherritt worker? If he was paid $3 million for this performance, how much would he have been paid if the stock actually rose to one dollar? I doubt if those questions would ever enter the mind of anyone on the board.

The figure is high for what shareholders are getting. But that is the case with most CEO awards because bias and a tilted playing field (of, by and for corporate elites) are built into that process.

Bottom line: when the board and top five executive officers are awarded a total of nearly $8 million as custodians for what has been a long-time  penny stock company whose share value appears to have little chance of breaking a buck in the short- term, corporate governance is not doing what it is intended to do.

I am always wary when I see a cut and paste approach to the discussion of executive compensation. For each of the top five officers, the following was noted in their review: “_____ was successful in delivering on his (her) goals and the compensation decisions considered his (her) achievements in 2022. The Human Resources Committee did not make any adjustments to the calculated short-term incentive formula. Equity incentives were awarded at target.”

Just fill in the blank for the name and you have the same outcome. I was the first to point out that for many years, now defunct Bear Stearns used exactly the same language to describe the compensation performance of its top officers. It was one of the reasons I asked at the time Does Bear Stearns Really Have a Board? You can read my two part series on that here.

I was also struck by the lack of discussion about ESG in the company’s disclosures.  While I am a critic of many aspects of current ESG practices, which are riddled with confusion and inconsistency, I am taken aback that for a company in the mining business in 2022, the discussion of the CEO’s key results (p. 67) did not mention a word about ESG or climate. It is surprising that none of his compensation was tied to any ESG benchmark. So you have to ask how seriously they are taking ESG, as it would seem there is no built-in incentive at the CEO level to improve outcomes (and perhaps ratings).

On that subject, one rating agency scores the company a “B” while and another gives it 46 percent. I have no idea how these ratings were determined. The material in the company’s sustainability report mixes benchmark performance with highly aspirational language and does a lot of check-the-box reporting.

One last point on compensation. The current management information circular indicates the company plans to return to stock options in 2023.This practice was discontinued by Sherritt in 2018-2019, as it was for other mining companies. But there is no coherent explanation for the change in the company’s disclosures. This is not sound compensation practice.

The Globe and Mail’s David Milstead has some thoughts on the compensation boondogglefor Sherritt’s previous CEO, David Pathe. Mr. Milstead notes “Of the 43 current diversified metals and mining companies listed on the TSX that also traded over this exact period, Sherritt ranks 36th, according to S&P.

Somebody has to speak up for sanity in CEO pay and for sound governance when its clearly missing. It’s not that frequent a voice these days, as so many shareholders have said in a number of emails to The Finlay Centre.