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.

But is it the desire for more money, and not the quest for better governance, that is really driving the hike in directors’ compensation?

Our friends at the Conference Board announce that directors’ pay for the past year was up considerably from the previous twelve months -–in some cases jumping by more than 20 percent. What a surprise. The trend for directors to pay themselves more has been growing since the epidemic of business scandals in 2002, when there was a marked grab for more cash even in the face of tumbling share value, indicted CEOs and bankrupt companies. Since then, the increase generally has been 20 to 30 percent a year for some sectors.

To me, making a play for bigger bucks at a time when investors had suffered considerably and public confidence in the leadership of big business had become so worn smacked of a colossal lack of judgment. It was the same lack of judgment that got business into the mess in the first place –which essentially had stemmed from the failure of directors to direct.

The argument directors and their handlers make is that it takes much more time to be a good director since Sarbanes-Oxley was passed in 2002. But if you had asked this same self-aggrandizing chorus about the need for boardroom changes prior to Sarbanes-Oxley and what they were doing to bring them about, as I often did in personal conversations and in my op-ed pieces, the response was always the same predictable cliché: they were working as hard as they possibly could to be the best directors they could be. These directors gave the impression of being the boardroom equivalent of coal miners who descend into the earth for monthly meetings and return covered with the sweaty soot of tough committee work.

Having been in those rooms and known many directors personally over a couple of decades, my observations led to a different conclusion. While some take their duties seriously and prepare for their meetings, too many others are like former Ontario Premier David Peterson, who admitted under oath during a regulatory hearing into the demise of YBM Magnex (one of many companies whose board Mr. Peterson sat on at the time) that he did not make notes at board meetings nor did he take any material away with him after the meetings. It was apparently a drift-in, drift-out situation. It’s the kind of easy-going, don’t-rock-the-boat, director style that the cozy club seems to appreciate and which makes Mr. Peterson still much in demand by CEOs as a director, even though YBM Magnex went under in disgrace and the U.S. Justice Department was alleging that company management engaged in money laundering.

Does huge pay make for a good board? Nortel had the highest priced board in Canada for a number of years. The company today remains on life support, its share value a pale image of its heydays; the taint of scandal and accounting irregularities difficult to shake. But if boards are to be paid more and more, there should at least be a fuller accounting to shareholders of exactly what directors have done to earn their money. Assuming for the moment that shareholders actually hire the board, as the law counsels they must, then owners should have information upon which to assess director performance, and should require that an annual assessment of board performance be conducted and provided to investors prior to annual meetings. And certainly there should be a limit on the number of outside boards on which any director is permitted to sit to ensure that investors are getting the full attention of their directors.

Don’t hold your breath waiting for these changes. At best, it seems, many boards have a tenuous connection with reality in terms of knowing what is in the best interests of shareholders or what the company and its management are actually doing. Directors may make many claims that they have finally gotten the message about what good governance is all about, but as I recently posted in Finlay On Governance, they have been making the same claims before and after every wave of scandal for the past 100 years.

Given the checkered history of the boardroom, it seems reasonable to conclude that it is the desire for more money, and not the quest for better governance, that in the vast majority of cases is driving the increase in directors’ pay. The same mindset that has seen boards hand out record amounts to CEOs in recent years, and often without any discernible relation to stock performance or other realities of business life, is what is causing directors’ pay to soar. It’s just too good a deal to allow a little thing like proper accountability to shareholders to get in the way.