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.

The Fallacy of Giants | Part Two

Essay by J. Richard Finlay

The blind eye which shareholders and analysts too long cast upon the abuse of excessive CEO pay is now being turned to the recent trend of monetizing ethical abuse. Who knows when the tipping point might come in the ever-widening wealth gap where capitalism is finally seen to cross the river of moral conscience and moves from being trumpeted as a source of social progress and individual incentive to one of middle class tyranny and public opprobrium. 

Continuing from Part I

One of the defining features of today’s world of big business is that, too often, shareholders have been willing to turn a blind eye to any amount of pay to a CEO, no matter how disproportionate, as long as they were getting impressive returns each quarter.  Never mind how many times poorly crafted compensation devices gave incentives to CEOs to artificially push up the stock when such growth could never be sustained in the long run.  As I suggested to the U.S. Senate Banking Committee long before the financial meltdown that traced its roots in part to unsound compensation schemes:

The most corrosive force in modern business today is excessive CEO compensation. Such lofty sums tempt CEOs to take actions that artificially push up the price of the stock in ways that cannot be sustained, and to cash out before the inevitable fall.

Our comments on these pages and elsewhere over the years have also attempted to rebut the most common justifications frequently advanced by boards as to why CEO pay needs to be at the level to which it has skyrocketed.

But the inescapable lesson of history appears to be that no boardroom scandal or financial meltdown is so great, no gap in wealth or income is so wide, that it will deter CEO pay from its self-appointed destiny of creating the wealthiest professional class in the history of the world.

Now a view is emerging in many boardrooms and on Wall Street that appears to regard ethical and legal transgressions, even the kind that result in multi-billion dollar fines, penalties and settlements, as mere transactions.  This is the case with JPMorgan Chase, whose profitability is so vast its shareholders are prepared to accept a record settlement with the U.S. justice department for $13 billion (among other penalties) as just another cost of doing business. The stock has risen 28 percent in the past 12 months.  Other examples abound, including Bank of America’s $9.5 billion to settle government actions involving federally insured mortgages, $1.2 billion paid out by Toyota and $7 billion in penalties by drug makers GlaxoSmithKline, Pfizer and Abbot.

It is not as if the ethical and legal dimension of business has suddenly dropped onto the corporate landscape unexpectedly. There are more compliance officers and university think tanks on ethics than at any time in the history of business.  Every publicly traded corporation has a code of ethical conduct. Company websites all make reference to being committed to the highest standards of ethics and honesty.  Most CEOs will give an annual keynote speech somewhere showcasing the social responsibilities of their business.  I’ve written many of them over the years myself.   Enron had a stellar reputation for commitment to high ethical standards.  Its CEO, Ken Lay, liked to be known as “Mr. Business Ethics.” But between the words and the actions of too many companies there falls an ethical shadow.   It is much easier to simply assume a standard of ethical performance than it is to subject it to the scrutiny and testing it actually requires.

History is littered with the bleached remains of fallen giants, even of the corporate species. Nortel and BlackBerry not long ago led their industries. Today, one has vanished and the other is quickly disappearing.  Some years ago another Canadian institution, Royal Trust, collapsed under the slumbering eyes of inattentive directors and stunned regulators.  Livent was North America’s largest publicly traded theatrical entertainment company. But its most artistic accomplishment came in the form of the highly creative, but decidedly unlawful, accounting engaged in by its Toronto-based founders Garth Drabinsky and Myron Gottlieb, who both swapped the company’s swank Manhattan condo for sentences in a Canadian prison.

General Motors had a hammerlock on the North American auto market that was thought to be unbreakable, until it limped pathetically to the wicket of government assistance and declared bankruptcy.  The “new” GM is today being rocked by the lingering effects of a culture that dismissed the risk of customer deaths from defective ignition switches as an acceptable business cost. Microsoft, once the dominant force in consumer software to the point where it actually fixed prices, has been reduced to selling software for competing Apple iPads on the rival iTunes store as consumers abandon its signature Windows software in droves.  And to the pantheon of vanished business icons, Bear Stearns and Lehman Brothers are now fully inducted, as are their former leaders, Jimmy Cayne and Dick Fuld.

Like many other companies, they were lost to the all-too-common, but entirely avoidable, affliction of hyper-ego and deficient common sense.  Before the crisis that claimed them, we often asked here if some of these companies actually had a real board of directors, since it seemed there was little evidence of them when they were most needed.

In situations like these, and in many others, when disaster strikes the board of directors typically professes surprise and claims to have no idea what could have caused it.  Memo to board secretaries everywhere: Have a full-length mirror installed in the boardroom.

The idea that there are few outcomes that are not insurmountable when a company skates over ethical and legal boundaries, that a board can throw money at any type of egregious conduct to get past it, is fundamentally subversive to the well-being of both capitalism and society. It feeds the delusion, commonly held by many who enjoy great wealth and power, that certain companies are endowed with a financial shield so impenetrable it makes them invincible to the consequences of their actions.  This same view creates a culture of moral hazard where the scale of the transgressions, and the costs necessary to remedy them, inevitably keep getting bigger and bigger until the unthinkable calamity occurs.  As the lessons of the great financial crisis of recent years demonstrate, when the unthinkable does happen, the CEOs whose misjudgments caused it have long fled with their trove of stock options profitably cashed out, while ordinary shareholders, and occasionally taxpayers, are left to pick up the pieces.

Far more important than the loss of any one giant, however, is the integrity of the system of capitalism itself.  Capitalism cannot survive if its leaders, guardians and gatekeepers remain willing to tolerate such costly misbehavior.  Nor will society, whose support it requires, endlessly abide a system that does not convincingly demonstrate that it recognizes a sacred obligation to the public for upholding a standard of ethical conduct that goes well beyond what has been evidenced by many firms in recent years.  Lest there be any doubt, twice in the past 100 years, capitalism has effectively turned to government for its very survival in what amounted to a public bailout from the epidemic of excess and misjudgments that led to massive job losses and social dislocation.

It would be the height of folly for the titans of Wall Street and elsewhere to conclude, as a result of these recent multi-billion dollar settlements, that they can simply write a cheque and continue on with business as usual whenever moral impediments stand in the way of increased profitability and outsized compensation.

Business has misjudged the reaction of society to a number of major issues over the years, from the dangers to food safety and the exploitation of child labor to threats to the environment and the need for safer cars.  The results were not particularly welcomed by business nor were they predicted by it.  And the business world did not exactly distinguish itself by the silence of its leaders in the early phases of the subprime meltdown or for presiding over an inadequately governed system that let America down to the point where corporate welfare through the generosity of government became capitalism’s only hope.  When high profile tycoons like former GE CEO Jack Welsh and Home Depot’s billionaire co-founder Ken Langone bemoan the expressions of antipathy toward Wall Street and big business, voicing puzzlement over its cause, as they regularly do on CNBC, for instance, they betray a larger disengagement from the forces that shape the social and political dimensions of modern capitalism.

Who knows when the tipping point might come in the ever-widening wealth gap where capitalism is finally seen to cross the river of moral conscience and moves from being trumpeted as a source of social progress and individual incentive to one of middle class tyranny and public opprobrium.  A firestorm of outrage may be in the waiting.

In that context, it is not unreasonable, and certainly not imprudent, to suggest that if a more fair and honest culture consistent with the core values with which America has always approached its concentrations of power, is not soon embraced, if the idea that ethical abuse can be monetized is not quickly dispelled starting with capitalism’s most valued icons, the costs to investors and to society will be measured in more than the Sagan-like billions and billions tallied thus far.

The Fallacy of Giants | Part One

David and GoliathAn Essay by J. Richard Finlay

on corporate integrity in the post-bailout era

Recent multi-billion dollar settlements involving Bank of America and JPMorgan Chase show the staggering costs of ethical folly and the culture of moral hazard that places too many companies, and capitalism itself, at risk.

It is the curse of giants to believe in their own invincibility.  It is also the curse of their acolytes, as the White Star Line discovered with its “unsinkable” Titanic and the Philistines learned with the defeat of their champion Goliath at the hands of a young shepherd boy.  Yet these lessons, and countless others, over millennia have not dispelled such illusions in the world of business, where size is seen as an insulator against all manner of misadventures and the too-big-to-fail mentality shows few signs of abating.  Indeed, the extent to which America’s major banks and Wall Street icons were on the wrong track when it came to compliance with the law and standards of ethics during the great financial meltdown and even afterwards is becoming even more striking.  Recent reports involving Bank of America, Citigroup and JPMorgan Chase vividly make the point.

On these pages in the years and months leading up to the worst financial crisis since the Great Depression, and in numerous op-ed columns before that, I wrote about the dangers of relying on the myths of giants.  Until they were categorized as being too big to fail, corporate monoliths like Bank of America, Citigroup and JPMorgan Chase were viewed as being too smart to fail.  Trophy directors and fantastically compensated CEOs, with the assistance of huge PR departments that never seemed to sleep, worked overtime to present an image where success was virtually guaranteed.  The reality, however, was that too many boards were recklessly disengaged from what was happening around them.  Seeds of folly were being sewn by undersupervised employees more interested in creating clever short-term financial devices than sustainable building blocks of long-term business.  And too many investors and journalists had become prisoners of what I call cheerleader capture. First cousin to the condition of regulatory capture, this refers to the state where it is virtually impossible for any dissenting voices to penetrate the thundering chorus of cheers by insiders and their loud choir of supporters.

There were warning signs of the unwise effects of that mindset, to be sure.  Scandals involving security analysts, for instance, for which Henry Blodget became the poster-boy, revealed the dangers of a culture of cheerleader capture.  In too many cases, the analysts who were supposed to be delivering objective assessments of the financial health of companies enjoyed personal and career incentives that caused them to paint a more glowing picture than justified by the facts.  Citigroup was touched in several ways by that scandal.

There were the accounting frauds at Nortel, Enron and Worldcom that were so stunning they resulted in landmark legislation known as the Sarbanes-Oxley Act being passed.  The collapse of Hollinger and Livent provided an interesting coda to those scandals. If these events of just a few years earlier had been taken seriously, they would have produced a higher standard of boardroom oversight that might have prevented the blunders and financial chicanery that brought the world to the brink of the financial abyss in the first decade of the 21st century.

But even before the gales of that crisis rose to full force, this space questioned the governance practices of companies like JPMorgan Chase, Citigroup, Bank of America, as well as Countrywide and Merrill Lynch, two institutions which BofA bought.  We took frequent issue with the sweetheart boardroom deals that propelled their CEOs into the super-compensation stratosphere.  We felt that the excessive deference accorded many CEOs reflected a perilous level of disengagement on the part of boards which in turn were failing to exercise the independent judgment needed to fully protect investors and the public franchise of capitalism itself.

Many of the decisions these companies made were fraught with ethical failures, violations of the law and just bad business thinking.  Their consequences are coming home to roost even years later.  Bank of America recently agreed to pay $9.5 billion in fines to settle civil lawsuits with U.S. federal housing authorities.  Ken Lewis, the company’s former CEO, settled with regulators by paying $10 million personally.  All told, it has cost BofA some $50 billion to resolve a variety of claims stemming from the subprime era, including the fraudulent actions of Countrywide Financial and misleading statements made in connection with the bank’s purchase of Merrill Lynch.

Improprieties at JPMorgan Chase resulted in an astonishing $20 billion being handed over to various regulatory authorities.  The amount barely caused a ripple on Wall Street, where reaction to the announcement registered nothing untoward in respect of JPMorgan’s stock or the reputation of its CEO, Jamie Dimon.

Citigroup, which has also paid out huge amounts to settle regulatory claims, recently failed the Fed’s financial stress test — for the second time in two years.  Its stock languishes at the unconsolidated 1-for-10 equivalent of the same $5 range it was at during the bailout crisis. Were its recent history of losses, bailouts and scandals not sufficient, there are new regulatory and legal issues arising from a potential fraud involving Banamex, a Mexican subsidiary. In one day early this April, Citigroup’s shareholders were hit with a double whammy.  The company said that it was unlikely to meet a key profit expectation it had set and then announced it was paying $1.12 billion to certain investors to settle claims stemming from mortgage securities sold before the financial crisis.

Yet the level of shareholder outrage one might think would be directed at Citigroup’s board for this Job-like litany of woes has, for the most part, failed to surface, just as tolerance of years of poor boardroom practices and bad decisions earlier led to a cascade of scandals and financial losses culminating in the bank’s  liquidity crisis that prompted the U.S. government bailout in 2008.

In no case has any banking or Wall Street executive faced jail time as a result of the misdeeds that resulted in these record massive payouts or those of other companies.  By contrast, in any given day on Main Street, courts routinely hand out jail sentences to elderly seniors convicted of  shoplifting and single mothers who pass bad cheques for even small amounts.

Like the notion of billions and billions of stars in the cosmos often attributed to the late Carl Sagan (with the help of Johnny Carson), it is hard to get the mind around the scale of these fines, payouts and penalties.  And in the case of Bank of America and JPMorgan Chase, and numerous other companies from drug makers to car manufacturers along the way, it seems nobody is even trying.

What seems to be happening instead is that the wrong-headed mindset that gave birth to excessive CEO pay has infected other fields of business responsibility and decision-making.  We explore this further in Part II.

The 29 Billion Dollar Men

If you see a lot of people going around with neck collars soon, it’s probably because they got whiplash when reading today that the top 50 hedge fund managers last year earned $29 billion. The number-one winner, John Paulson, made $3.7 billion in 2007. If the U.S. Treasury issued them, and it may have to the way things are going for some on Wall Street, Mr. Paulson would have been handed 3,700 one-million dollar bills. That’s enough to run New York Presbyterian Hospital, one of the nation’s largest, or the City of Boston for 18 months. It would provide tuition for four years at a flagship public university like U.C.L.A or Penn State for at least 74,000 students, or a year’s worth of life-saving clean bottled water for 2.5 million children in Africa.

There was a time when multi-billion dollar figures were connected mostly with the creation of lofty projects and the operation of large organizations. Now, in the modern Gilded Age that obligingly continues for a happy few, they have become a number that appears on one individual’s annual paycheck. Not a bad situation considering the view expressed by the Fed and other U.S. government officials that had they not intervened recently in the Bear Stearns implosion and come up with their generous bailout plan giving JPMorgan Chase a helping hand, capitalism, or at least Wall Street as we know it, would have faced certain calamity.

Speaking of Wall Street, there must be something popular there about the sum of $29 billion. It is the same amount the Fed came up with to bail out Bear Stearns/Wall Street. It seemed like Jamie Dimon had to go to a lot of work to get the Fed to come up with the money, staying up all night over the weekend a while back. All he really had to do was talk to some of his hedge fund friends. They don’t appear to have a problem coming up with $29 billion -in just one year.

If only the poor, the uninsured or the struggling to survive each day in Africa and elsewhere could be so smart -or at least worked on Wall Street.

Outrage of the Week: The Crumbling Pillars of Public Confidence

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Merck pays out nearly $5 billion to settle Vioxx claims, Yahoo incurs the wrath of legislators, and another poisoned child’s toy made in China is recalled. The growing credit market implosion threatens recession. These are the predictable consequences of the subprime leadership and ethics in our boardrooms and in our institutions of government over the past number of years.

The Outrage generally prefers to focus on a single event. This week, however, there was a common theme among several events. There was the Merck $4.85 billion settlement over its Vioxx debacle. Next, there was the appearance of Yahoo CEO Jerry Yang before the U.S. House Foreign Affairs Committee to answer questions about his company’s turning over information that led to the arrest and imprisonment of Shi Tao, a Chinese journalist and political activist.

The week ended with revelations that yet another toy made in China contained toxic chemicals and with officials ordering that Aqua Dots, distributed in North America by Toronto-based Spin Master, recall more than four million units.

What these incidents share is a betrayal on the part of the companies and leaders who could have done better, but failed miserably in their ethical performance. Merck is one of the world’s leading drug companies, yet it continued to market this highly profitable product even after company officials were warned by their own medical researchers of serious problems.

The company pulled Vioxx off the market in 2004, citing increased cardiac risk. But, as the Wall Street Journal reported at the time, Merck had earlier indications of serious problems. A March 2000 internal email shows company research chief Edward Scolnick warning that cardiovascular events “are clearly there.” Still, Merck continued to deny any link between heart attacks and Vioxx.

Yahoo is a company founded and headed by a brilliant billionaire who one might have thought had enough money and youth to still have a social conscience. But doing business in a multi-billion consumer market headed by a corrupt authoritarian regime was too tempting to resist, it seems. And so it was that Yahoo became an adjunct of the Chinese secret police –spying and snitching on its customers and thereby poisoning a name and a brand that had become known world-wide for its sense of innovation and exploration of the limitless knowledge held in cyberspace.

We don’t know who is really behind this latest toxic threat to our children. And maybe that’s the real problem here. Distant manufacturers operating under opaque regulations and dubious enforcement, vague distributors, off-shore companies and the lure of huge profits all conspire to put health and safety way down the line and out of the mind of any responsible entity. These kinds of incidents have happened too often in recent months to be a mistake. They reflect a cultural and ethical deficit endemic to the way global business is being done with despotic regimes.

Among the factors that are causing a crumbling of the pillars of confidence, the subprime mortgage scandal also figures prominently. Here, once again, the too-clever-by-half characters who concocted these elaborate schemes and got paid a sultan’s treasure for their efforts have turned out to be not quite as clever as they wanted us to think. It is unlikely they will have to repay any of the stratospheric bonuses they were receiving while creating these artifices that, like the bubble and the Enron-era accounting shenanigans, foolishly attempted to defy the rules of basic economics and common sense as only those infused with the curse of hubris will do.

And the figures touted for their wisdom and vigilance who are supposed to be monitoring the actions of these other bright fellows whom history has shown to have gotten carried away with themselves on more than a few occasions, seem not to have been as wise and as vigilant as advertised. Having underestimated the effects of these toxic credit toys before with assurances that the subprime mortgage defaults would not intrude into the broader economy, one wonders if they are any better prepared for the wider economic crisis that seems to be looming.

There will be many casualties before the full extent of the great unfolding 21st century credit debacle is over. There have already been a few CEOs who are taking a very well paid early retirement. More will follow. Some companies will not survive. The stock market will continue to experience unsettling jolts, like its more than 600 point drop this week. But, unfortunately, it will be the ordinary consumer —not the central bankers or the treasury luminaries or the credit agency raters or the boardroom directors who permitted this fiasco and were blind to its early signs— who will suffer most from the turmoil and set backs that lie ahead. So too will the idea that we can look to the icons at the top to do the right thing because their wealth and privilege bestow on them a higher level of accountability to do the right thing. That moral touchstone seems to have vanished, along with the primacy of the common stakeholder —something that has been a recurring theme at Finlay ON Governance.

These events have been the predictable consequence of what has amounted to decidedly subprime leadership and ethics in our boardrooms and in our institutions of government over the past number of years. They are a harbinger of the further crumbling of the pillars of public confidence and trust, which make them our choice for the Outrage of the Week.

The Autumn of Leaders Falling and the Rise of the Quiet Hero

An essay on icons of privilege and power in a skeptical world

Here and there, the turning leaves of autumn have begun to fall. A few leaders, or those who would have the world cling to such notions, have already preceded them. Alberto Gonzales has finally ended the torment of his pathetically inept performance as U.S. Attorney General, his tumble from a post he never should have held no doubt accelerated by the high-ranking members of the senate judiciary committee from both parties who publicly questioned his integrity. In addition to possessing unimpeachable credentials of honesty, it is always a good idea for holders of important public office to have —and be seen to have— an IQ above room temperature. It is hard to imagine an Attorney General in the 21st century who could make John Mitchell, Richard Nixon’s disgraced and eventually imprisoned AG, look better. But with his almost terminal state of amnesia about what was happening around him and his frequent reconstruction of key events which was later discredited by first-hand witnesses, Al Gonzales, the good friend of President George W. Bush, seems to have made that feat his defining accomplishment.

U.S. Senator Larry Craig (R-Idaho) fell from office on the floor of a men’s washroom of all places. But with his guilty plea to a misdemeanor charge, which he later recanted, followed by the announcement of his resignation last week and its sudden reversal a few days later, it would seem that Senator Craig has revealed an almost criminal level of indecision which itself should constitute grounds for his departure.

Former senator and recent TV star Fred Thompson’s entry into the Republican race for president would have fallen considerably short of the high expectations he generated —if it had ever gotten off the ground. A formal announcement on Jay Leno? Is this man really running for president or is he just planning to play one on TV? Many are already asking why this grumpy looking late entry thinks he could, or should, be elected president. His early appearances in Iowa and elsewhere suggest he hasn’t gotten around to figuring out the answer yet. Call in the Law and Order screenwriters.

The war in Iraq is increasingly viewed by Americans as the greatest foreign policy blunder in the country’s history. With the decline in support for the war, the popularity of its presidential chief architect swiftly follows. A majority of voting Americans believe the war has been a mistake and is not worth the cost. Only 26 percent approve of President Bush’s handling of the war, a figure that brings him perilously close to the low reached by President Lyndon Johnson during Vietnam.

In Toronto, movie stars have descended upon that city’s annual film festival in their private jets and block-long limousines. The carnival atmosphere of actors, groupies, paparazzi and high-powered parties has once again overtaken the town —or at least its better bars and hotels— that regularly appears in movies as New York, Boston or Chicago but rarely its actual self. It is an industry that is given to illusion, where it is difficult to distinguish between facts and myth and where hype often overshadows reality. Some stars are at the festival to promote their newest films. Others are there to promote their special cause and just coincidentally have a new movie to promote, too. Is it not remarkable how things work out with almost mathematically serendipitous precision for those with wealth, fame and cosmetically enhanced features?

Efforts to make the world better on the part of those endowed with privilege and opportunity are always to be commended. But sometimes, between the posing and the parties, the lavish displays of self-indulgence and the overreaching strides of the ever-glittering ego, the gravity and significance of the cause seem to get lost somewhere in the back of the limousine.

Why do so many leaders seem ultimately to be impostors in that role and ill-suited to its demands? Why do so many celebrities need to have their favorite causes accompanied by a traveling sideshow of parties, acolytes and five-star hotel suites? I suppose one should leave those answers to the psychologists. But even to the untrained eye there seems to be a narcissistic compulsion on the part of some members of the rich and powerful for constant attention and adulation. The applause and approval of the crowd become an irresistible addiction; the exercise of influence and power a thirst that can never be fully quenched. We are seeing the rise of what I call the virtue celebrity, where the pursuit of charitable endeavors and the recognition they bring has become one more weapon in the arsenal of personal and career marketing on the part of stars and billionaires. It is a world where success and public approbation has always required a good publicity agent. Now it requires a popular social cause as well.

Yet the more rich and powerful leaders and celebrities become, the more out of touch with reality they seem to drift. Britney Spears, Michael Jackson and Bill Clinton during his Monica days spring to mind. So does the procession of disgraced billionaire business figures and those more recently caught backdating stock options in order to grab a handful of extra dollars. More than a few have resorted to philanthropy and the pursuit of a socially laudable cause as a means of repairing a reputation damaged by their own misconduct or trying to impress regulators and prosecutors in the midst of investigations of wrongdoing. There is, it seems, never a shortage of announcements of gala dinners for yet another award ceremony or full-page advertisements extolling some stock option-rich benefactor whose endowment will be honored by his name appearing in large chiseled letters over the transom (the exterior of the Rotman business school building at the University of Toronto, for instance, displays the name of the donor financier in eight separate locations before you even reach the lobby). It becomes difficult even for the Panglossians among us not to occasionally wonder if such exercises are more about the feeding of oversized egos, and the creation of more places for the exalted to further exalt one another, than they are an authentically altruistic desire to make the world happier, healthier or wiser.

Some, of course, are genuine in their aspirations to make the world better. But a litmus test for sincerity is often humility —one of those rather underrated virtues that mothers try to teach but regrettably enjoys few adherents in the pantheon of the self-elevated.

Having worked with many of these kinds of people over the years, I have been struck by the fact that while they bask in the title and adulation that goes with being a public figure or celebrity connected to a special cause, often they fall measurably short when set against the lives, actions and sacrifice of more ordinary folks. The most impressive leaders I have known are those we generally never hear about. They are among the millions of individuals quietly performing acts of leadership and philanthropy who would never dream of making a side show out of it or posing for celebratory photos. They know their own limits and have a sense of perspective —two attributes which often elude the high-profile elite. They mentor the kids from broken homes, help out at the local hospital and travel to far-off parts of the world to fight hunger and disease. They seek no reward or title. They are always dipping into their own pockets to help out. You will not see their great feats of daily heroism on network TV, nor will you read about them besmirching the office they hold in the New York Times or elsewhere. They go about the important business of helping and inspiring others with a quiet dignity and strength of character that is often infectious. They are cut from the same powerfully modest mold as Lou Gehrig and Jackie Robinson —two of my personal heroes. They don’t need gala dinners, praising cover stories in major magazines or induction in, say, the Order of Canada whose membership still includes convicted felon Conrad Black and fugitive from U.S. justice Garth Drabinsky. And while many are incredibly generous in their charitable giving, they would not dream of having something named after them. Unlike the nouveau billionaire class, who seem to need the accompaniment of a brass band, klieg lights and a posse of publicity agents every time they make a donation, several millionaires I know write substantial checks each year and don’t even bother claiming the gifts for tax purposes.

The world will always need its larger than life figures —its Winston Churchills, its John F. Kennedys, its Pierre Elliott Trudeaus— to envision and inspire in new directions. They are few and far between, as their successors in office regularly confirm. It will always be captivated by its screen stars, though hopefully will not elevate them to the status of entire planetary systems rivaling the discoveries of Galileo. But from the boardroom betrayals of Enron and Hollinger and the epidemic of greed illustrated by out-of-control CEO pay to the quagmire of Iraq and the primacy of the privileged which has given rise to the greatest income gap since the 1920s, it is a world that is too often let down and disappointed by those whom it has entrusted and revered. We have discussed this phenomenon before in the context of the vanishing stakeholder. It is a reality that will increasingly see society turn to what I call its quiet heroes —the everyday leaders around us who are changing the world for the better in the voluntary organizations they run, the causes they support and the social needs they fill. Perhaps astonishingly to some, they are doing it without scandal, award ceremonies, private jets or gas-guzzling limousines.

If conventional leaders and cause-oriented celebrity icons are genuine in their aspirations and are looking for a model to work and live by that gets the job done well, they could do worse than follow the example set by their more unassuming counterparts.

Rowland Frazee | 1921 – 2007

It is a legacy that stands in sharp contrast to the so-called hedge fund and LBO heroes of today, who instantly appear then quickly vanish from the scene, and where the celebrity status of self-proclaimed movers and shakers has about the same shelf life as a prize in a cereal box. It is also a lesson that gentlemen, too, can rise to great heights but still keep their feet on the ground.

A remarkable man passed from the scene this week. His name was Rowland Frazee and for many years he was chairman and CEO of Royal Bank of Canada, the country’s largest bank. He was remarkable not just because he was a highly successful business leader, but because he managed to rise to the pinnacle of success while being a gentleman with a strong social conscience.

I first met Mr. Frazee some three decades ago, when he was on a jury which gave me some award. He was interested in social responsibility issues long before they became a fad. One way you can tell a genuine leader is by his capacity to show an interest in others and make them feel important. And I felt very important after my meeting with him. He was like those baseball greats of yesterday who managed to hit more than a few out of the park but always had their feet planted firmly on the ground. He started working in a small bank branch, answered freedom’s call in the second world war, where he was wounded three times in the Italian Campaign and in battles in Europe, and then returned to raise a family and resume his career. He presided over a period of impressive growth and change at Royal Bank that kept it solidly in the lead of its competitors. And, believe it or not in this day of numbingly common ethical debacle and almost daily corporate embarrassment, he managed to do it all without a hint of scandal or making a giant size payout because somebody at the bank dropped the ball.

He was, like many who have come this way and are now sadly gone, part of the greatest generation. They knew what was important. And they knew what many in my generation and a few others forgot or perhaps never learned: a virtue called humility and the concept of “enough.”

Rowland Frazee’s life and career seem such an astonishing contrast to the so-called hedge fund and LBO heroes of today, who instantly appear then quickly vanish from the scene, and where the celebrity status of self-proclaimed movers and shakers has about the same shelf life as a prize in a cereal box. They strut around the stage for a while. Some even manage to acquire billions and ever more youthful wives. But in the end, they don’t seem to leave very much behind that can be measured or appreciated in human terms. Egos die. Legacies endure.

Mr. Frazee retired some years ago to the small New Brunswick town where he was raised, and contributed his time and ideas to the community. He touched many people in far-reaching ways, not the least of which was to remind us all that there is room for a gentleman in the world of big business who can still accomplish a lot without being nasty, garish or boasting about the size of his mansions.

I am not generally one to suggest more awards in a world already overcrowded with prize-winning real estate agents and endlessly honored show business types. But there would be no better way to celebrate Rowland Frazee’s legacy than for Royal Bank’s board of directors to establish an award that recognizes and encourages in others the kind of civilized conduct he exemplified in business and public life. It is a model which both business and society need to see much more of these days —and very soon.