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.

AIG’s bonuses have become more than just a tipping point for a long simmering resentment over executive compensation.  They have become an entire gravitational force field of umbrage at the greed, arrogance and now horrifically costly stupidity on the part of these Wall Street masters of the universe, as they preferred to be called in times of a calmer CBOE volatility index.

(Wall Street tycoon)

We are shocked, shocked, to find government trying to interfere with free market capitalism.

(Government official)

Here is your share of the TARP bailout, sir. 

(Wall Street tycoon)

Thank you very much.

Recent events make it easy to imagine such a remake of Captain Renault’s iconic lines from the classic film, Casablanca.  But even the highly creative Epstein brothers, who wrote the original screenplay, would have trouble accepting that the hypocrisy uttered on Wall Street today would make for credible dialogue.   Believe it.

Two names have managed to unleash a sense of public outrage like no others in recent memory.  The first is Bernie Madoff, who set a new Ponzi scheme record and is currently residing in a Manhattan municipal holding cell awaiting sentencing in June.   The second is AIG, the giant insurance company that set a record for corporate losses and taxpayer rescues to the tune of $175 billion, and still believes that some of its employees should receive $165 million in bonuses. That there could have been even the slightest thought given to allowing such profiteering in a time of unprecedented financial turmoil, much of it at the hands of the same AIG employees for whom the bonuses are intended, shows the extent to which sanity, along with any vestige of sound corporate governance, long ago left AIG’s boardroom.

Not surprisingly, the bonus move has prompted a cascade of indignation from government officials and ordinary individuals everywhere.  In many ways, what is happening at AIG has become emblematic for what ails Wall Street and illustrative of how far removed it has become from the anchors of sound judgment and common sense.   AIG’s bonuses have become more than just a tipping point for a long simmering resentment over executive compensation.  They have become an entire gravitational force field of umbrage at the greed, arrogance and now horrifically costly stupidity on the part of these Wall Street masters of the universe, as they preferred to be called in times of a calmer CBOE volatility index.

President Barack Obama has already declared the bonuses a disgrace.  The U.S. Congress is debating claw back legislation.  For its part, however, Wall Street seems to regard any government action as the tip of the iceberg and the beginning of a breach into the boardroom where pay is predictably decided by rarely unaccommodating directors.  It has been a pleasant arrangement for the past many years and no one on Wall Street or elsewhere in business wants to see the cozy deal derailed. 

No endeavor is so fraught with risk or more certain to produce tumult and warnings of impending Armageddon than an attempt to come between those at the top of business and their first-class passage on the non-stop gravy train of ever-accelerating compensation.  You can apparently have the greatest upheaval in the capital markets since the 1930s and the widest division of wealth since the 1920s, along with record unemployment and trillions in taxpayer commitments spent to prop up shaky institutions -all of which can be traced back to pay abuses and governance failures- and still have Wall Street and its adherents demanding bonuses and less government intervention -except for all those trillions, of course.

Many on Wall Street warn that if executive compensation among major TARP recipients is capped, there will be serious repercussions that ultimately harm the economy.  What could those repercussions be:  A serious recession? Galloping unemployment?  A freezing of credit for small business owners and ordinary individuals?  Or maybe just trillions in taxpayer commitments would be required to bail out the institutions that brought the economy to its knees.  Americans have seen this movie before.  They have become repeat viewers of it regardless of their wishes.

Neither Wall Street nor the apologists for the AIG bonuses have the slightest credibility when it comes to issues of compensation.   Over the past five years, when the faulty, risk-oblivious decisions that led to the present crisis were being made, the CEOs of Countrywide Financial, Lehman Brothers and Bear Stearns, Merrill Lynch and AIG received aggregate compensation in excess of one billion dollars.  Four of these five institutions have disappeared as stand alone companies; AIG is holding on by a thread, along with $175 billion from three taxpayer rescues.  In 2007, compensation for Martin J. Sullivan, AIG’s then CEO, more than doubled from $17.7 million in the previous year to $43.9 million.  Then there is the still to be explained $3.62 billion in year-end bonuses at Merrill Lynch, which lost more than $15 billion in the final quarter of 2008.   We will no doubt be reading soon about the efforts of more companies and executives to keep the bonus goose alive, for those are the golden eggs that have always been the real concern of Wall Street and its cheerleaders, not what they hatch for Main Street’s benefit.   

Just this week, the CEOs of Citigroup and JPMorgan Chase wrote memos warning about the dangers of limiting compensation for companies receiving public funds.   One might have thought an effort to show leadership in bringing about a sea change in excessive compensation which would recognize that this is a time for a measure of sacrifice on Wall Street that is at least equal to what is being required of Main Street would have been more impressive.  This, of course, is not the first time Wall Street has shown itself to be tone deaf when the need for change came pounding at its door. 

Take a look at this clip of Richard Whitney, then president of the New York Stock Exchange, who railed against President Franklin D. Roosevelt’s campaign to bring a higher standard of transparency, accountability and integrity to Wall Street. (It was no wonder Whitney had a problem with those ideas.  At the time he was embezzling from a number of charities, including the Exchange.  He was sent off to prison in 1938.  It was the Madoff scandal of the era.)

The dangers of excessive pay and a boardroom culture that is overly permissive of unbridled greed go well beyond Wall Street.  They were factors in the demise of Nortel, Livent and Hollinger, Enron and WorldCom, and in the criminal conduct at the top that has been alleged or proven in each of these once-fabled companies.


More than a decade ago, I gave a speech to an international conference of investment bankers in which I raised the specter of government involvement over excessive pay.  The audience reacted politely but with obvious skepticism.  “FDR has been dead for a long time,” one major banker quipped in the Q & A session that followed.  But the next day, a business newspaper ran the story with the headline: “CEOs warned fat paycheques will bring government action.”  It continued:

In an apocalyptic speech to a financial services conference in Toronto, Mr. Finlay warned that the survival of capitalism itself could be at sake.  The danger is that ‘business excess’ could lead to ‘excessive intrusion’ by government, he said.  When it is ignited, he added, ‘public outrage has been a force that has swept away kings, czars, presidents and prime ministers.  It is not likely to be more forgiving of a few misguided CEOs or a business system that fails to produce fairness as well as profits.

The red flags about how the compensation system on Wall Street and in many quarters of business is neither sane nor fair have been present for some time.  What is unsettling to those of us who believe in (well-governed and responsibly led) capitalism and its promise is the fear that the disconnection from reality that is being witnessed today may well manifest itself in other forms, just as excessive pay and an obsession with supersized bonuses flowing from subprime mortgage-related investment vehicles shaped the contours of the current crisis.  

When billions of dollars and the livelihoods of millions of people are at stake, one hopes for an occasional glimpse of leadership behind the doors of some of the most lionized corporate names in the world.  That would include a willingness to sacrifice and an ability to inspire confidence among much needed constituencies of support.  If ever there was a time when Wall Street needed to usher in a rapprochement with Main Street and regain its trust, if a time had come to build upon this new partnership between government and the private sector to forge more positive directions and values, this would surely be it.   Where is the public leadership agenda of Wall Street and its stewards?  When will they get out from the towers of Manhattan and begin to build relationships with the farmers of Iowa and the metal workers of Michigan?  It’s not even on their radar. 

Defending AIG-type bonuses while making threats that government intervention in compensation will prompt dire economic consequences to an American public that has already paid out trillions for Wall Street’s failures and abuse is the path to neither recovery nor the restoration of public confidence it requires.  Rather, it is a confirmation of the madness that has brought the world to the brink of calamity’s cold embrace.