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.

What Shell is the CEO Bonus Under at Lehman Brothers?

It rather neatly illustrates the farce that CEO pay has largely become when Lehman Brothers chief Richard S. Fuld, Jr. announces that he will decline a bonus this year. The board compensation committee has not yet met to determine if one would even be offered to him. But that probably is just a formality because it is Mr. Fuld who is really calling the shots here in his various capacities as CEO, chairman of the board and head of the executive committee.

Of course, eschewing a bonus in a company that just posted a staggering $2.8 billion dollars loss for the second quarter is a little like the customer who breaks a Limoges vase at Tiffany and tells the clerk not to worry about the gift wrapping service. It’s hard to see why any credit is due in making such a statement. A more meaningful gesture would be to give back some of last year’s $40 million bonus that was awarded when many of Lehman’s flawed, and horrifically costly, decisions were being made. But because it would actually carry some actual sacrifice, and show genuine leadership that is sorely missing from Wall Street in recent years, Mr. Fuld will not offer to do that.

It is another example of where CEOs have gotten so far offside both reality and perception. It is that reality and perception that is today, perhaps more than Mr. Fuld, shaping the future and direction of Lehman Brothers.

Edward R. Murrow at One Hundred: Still Journalism’s Gold Standard

This week marks the 100th anniversary of Edward R. Murrow’s birth. For the generation of my grandparents and parents, his voice was synonymous with integrity in reporting the events that shaped their lives. Few could match his gift for words or their authenticity in describing the seminal events of his era -a war-time Europe in flames; the horror of Germany’s concentration camps; and, later, the terror unleashed by a particularly odious junior senator from Wisconsin.

He practiced the craft of speaking truth to power, which, at its best, is what journalism is about. It is such an important calling in a world where the ability to hold the powerful to account is the lifeblood of freedom and democracy. In sentence after sentence and in program after program, from his days in war-torn London to his legendary “See it Now” series, this icon of American broadcast journalism reminded people how imperative it was that they knew what was happening around them in their world. People invariably felt better-informed and reassured after listing to Mr. Murrow. He did not talk down to his audience, nor did he find the need to engage in the kind of babbling banter that passes for insightful commentary in many newsrooms today. It was the respect he showed for the obligations of the journalist and for the power and responsibility of words themselves that allowed him to gain the trust of the public. How rare those qualities seem today.

Had he lived in this time, I suspect Edward R. Murrow would likely have been a rather iconoclastic figure. He would not be among those of his profession today who appear to sleepwalk while power is moved more and more into the hands of governments and special interests. He would not have remained silent as the voice of the ordinary individual is increasingly drowned out by the lobby of the super rich and those seeking their favor, nor would he have been a passive witness to what I have called the era of the vanishing stakeholder.

Surely, he would have been troubled by a society which is rich in news information but rarely in context or balance, where ratings are the ultimate determinants of what the media portray as the truth, and where the world seems inexorably heading to a point where most people will seek to be informed by that most authoritative of all news sources: YouTube.

Would Mr. Murrow have found today’s culture of mainstream journalism inviting? Or would he have turned to the blogosphere as the only place were a truly independent voice can be raised and heeded? And what would he think about the level of journalistic standards that sees major newspapers still offering Conrad M. Black, currently serving a 78-month sentence for fraud and obstruction of justice, a platform for his opinion on American politics and foreign policy direct from that bastion of academic integrity known as the Coleman federal correctional complex in Florida?

I believe we have a sense of where he would have been on the war in Iraq and the climate that preceded it, where it was considered un-American to question the merits and costs of the war, the evidence offered for its prosecution, or the motives of those who so strongly advocated it.

Here is a quote from a 1953 broadcast that seems especially appropriate today. It is vintage Murrow, and we give the last word, as it should be, to the man himself.

“If we confuse dissent with disloyalty – if we deny the right of the individual to be wrong, unpopular, eccentric or unorthodox – if we deny the essence of racial equality, then hundreds of millions in Asia and Africa who are shopping about for a new allegiance will conclude that we are concerned to defend a myth and our present privileged status. Every act that denies or limits the freedom of the individual in this country costs us the. . . confidence of men and women who aspire to that freedom and independence of which we speak and for which our ancestors fought.”

Watching The Wall Street Journal Watching Us

Finlay ON Governance made it into the WSJ’s online edition yesterday in connection with our post below about Goldman Sachs –or at least the flattering portrayal of that institution by The New York Times. The Rupert Murdoch effect is already showing. I was quoted in the New York Post a few days ago too.

I often find online reporters and commentators tend to be a little more clever and quicker to notice something than their print counterparts. Certainly, their headline writing abilities are better –and they usually get to write them themselves –unlike the print side of the business.  I seemed to have an almost unbroken record of having the lamest headline writers for my print op-ed columns over the years, despite the fact that I used to spend a lot of time coming up with what I thought was just the right short mix of attention grabbing and informative words. No, each time some anonymous copy editor would rewrite the headline and turn it into something I would have to make sure even my mother would never see, lest she think my writing skills had taken a sudden plunge into the pool of the banal. The headline written by MarketBeat columnist David Gaffen for the story above, is, well, pure gold.

There is a rumor that the Journal’s online edition, one of the best features of its kind on the Internet hands down, may become free. I’ve been a subscriber since the beginning. It would be nice to see it opened up to everyone in the same way The Times stopped that silly extra charge to read its columnists. The 21st century economic model for the Internet has its origins in a ground-breaking invention of the early 20th century: the radio. Then, the model was to maximize the audience size with interesting content and make the money with advertising. The subscription-based Wall Street Journal online edition, by the way, currently contains advertising of both the traditional static and flash motion varieties. A free online Journal could tie its content in with all kinds of existing sites and create a Google-like omnipresence of a respected news brand that would no doubt pay off handsomely in advertising dollars.

Mr. Murdoch seems to be more aware of the benefits of this economic model than a lot of the old guard executives at the paper who are half his age. I have a suspicion he is leaning toward freeing up access to the WSJ online. I also have a suspicion that if that is what he wants, that’s what’s going to happen.

Outrage of the Week: Conrad Black’s Return to the National Post

outrage 12.jpgThe trial of Conrad Black and its wider significance in the annals of business leadership and corporate ethics has occupied some considerable space at Finlay ON Governance. We advanced no position on Mr. Black’s guilt or innocence while the matter was before a jury. But since the verdict in U.S. federal court in July, it is fact, not speculation, that Mr. Black is a convicted felon. Our attention in that respect was focused recently not so much on Mr. Black as on Canada’s National Post, where he was once controlling shareholder. While Mr. Black is unable to lawfully return to Canada even as a temporary resident, he has apparently no problem returning to his place at the Post as an opinion maker.

With great fanfare on the front page of its Saturday edition, the paper trumpeted the reappearance of Mr. Black’s column. Perhaps we are a little old-fashioned, but the idea of a convicted felon proffering opinions just weeks away from being sentenced on three counts of fraud and one count of obstruction of justice seems a bit bizarre. Allowing Mr. Black to ponder on the excesses of the retail habits of wealthy south Floridians is equally perplexing. Talk about Black calling the kettle….

One has trouble imagining the New York Times giving space to former WorldCom CEO Bernie Ebbers, currently residing in federal prison for accounting fraud, or the Washington Post welcoming back Sanjay Kumar, one-time head of Computer Associates. We do not recall the Daily Telegraph allowing Lord Kylsant of Carmarthen, also convicted of fraud in connection with the running of a publicly traded company, to pen his views on the case with that legendary ink in 1931 (Lord Black was the first British peer since Lord Kylsant to be so convicted). A felon’s corner in newspapers would certainly have no shortage of contributors and no doubt every embezzler and purse snatcher would tell their own special tale of injustice. We think that’s not exactly what readers are looking for from the icons of print journalism. What is also disappointing is the fact that the editors and publishers of the Post felt no obligation to explain their reasoning for this unusual move. They simply acted as though nothing had happened to Mr. Black in the past few months.

One might reasonably wonder what exactly the criteria are for selection of Op-Ed columnists at the National Post. This murky area of journalism, which this writer too once inhabited, operates in shadows and secrecy. As noted on these pages before, I wrote in the Op-Ed section of the Financial Post periodically over the course of two decades. When Mr. Black bought the newspaper, I was among its first casualties (the column was quickly picked up by the Globe and Mail).  The fact that I was one of the few who dared to criticize Mr. Black’s corporate governance practices at Hollinger or note publicly his role on the boards of prominent failed companies may, of course, have been entirely coincidental.

Like Conrad Black, I also learned some lessons from my late father. It was his habit to review the commentary pages of half a dozen newspapers on a daily basis. The ritual was frequently accompanied by the instruction to his children that the opportunity to put forward views that shape and influence society is a privilege for any writer. For newspaper publishers and editors, the guardians of such intellectual real estate, it is a trust. Is giving a platform to fraudsters and felons consistent with that trust? I raised those questions in a letter to the editor of the National Post earlier this week after Mr. Black’s column appeared. It was never published. Nor did any letter from anyone else who was critical of the decision. What a surprise.

For Conrad Black, it seems, things are not the same as they are for you and I. His friends at the National Post clearly think he should continue to be treated differently. Their tough stand on law and order, long an editorial hallmark of the Post, apparently does not apply to one of their own.

What happened to Conrad Black, as we have noted before, is not something that those who have known him and looked up to him will take any satisfaction over. For him, it is life altering. For his family, it is tragic. Still, it is a fate delivered by his own hands. But when a respected institution such as the National Post also begins to slip from the standards and expectations which it has espoused, appears blind to the legitimate findings of the American legal system and is prepared to act as though nothing really happened, it is even more troubling. It is why we have chosen the actions of the National Post in permitting the return of Conrad Black’s columns the Outrage of the Week. Our unpublished letter to the editor is reprinted below.

To the Editors of the National Post

Re Conrad Black

As a believer that important newspapers such as the National Post serve their readers and society best when they adhere —and are seen to adhere— to the highest journalistic standards, I am at a loss to understand the basis for Conrad Black’s return to the Opinion page (Living beyond our means, September 22, 2007). It raises the question: Is it appropriate for a convicted felon to have a by-line as one of the Post’s columnists? We know that Mr. Black and other directors were unbothered by having shopping centre magnate A. Alfred Taubman on the board of Hollinger International after his conviction on criminal charges of price fixing. But the well documented misjudgments and failings of Mr. Black and his fellow directors in that company are a dubious model to follow.

The fact is neither an experienced reporter nor a junior copy editor in the National Post would long be retained if they were convicted of a criminal offence. Experience also teaches that Op-Ed contributors have been dropped for a variety of lesser reasons. My periodic columns, for instance, which appeared in the Financial Post over some two decades and dealt frequently with corporate governance and business ethics, (and were occasionally critical of Mr. Black’s governance practices as CEO of Hollinger) were terminated, without explanation, as soon as Mr. Black took control of the newspaper.

Also apparently escaping editorial scrutiny is Mr. Black’s commentary on the excesses he has discovered while temporarily living in Florida. By what stretch of reason would one recently convicted on three counts of fraud be deemed a credible and reliable authority regarding such observations?

Whether the publishers of the Post like it or not, Mr. Black does not hold the same stature now that he did when writing there as a columnist prior to his conviction. The reality of his fate may be regrettable, even tragic. But the National Post does a disservice to its reputation and to the intelligence of its readers by acting as though the last several months in Chicago never mattered.

J. Richard Finlay

My Maria Bartiromo Moment

Maria .jpg

They say timing is everything. There was quite a response to my comments in the major AP report on executive compensation, which was picked up by hundreds of newspapers in dozens of countries. All kinds of journalists, academics and TV producers began contacting me and sending emails —a minor bombardment actually. Plain speaking about the realities —and dangers— of CEO pay abuse from a pro-business advocate of responsible capitalism is something media folk seem to find refreshing, if not rather unusual. But all this reaction came in exactly the week I long ago arranged to take some vacation time. I wouldn’t have minded so much until CNBC called wanting me to be on The Closing Bell the same day —with Maria Bartiromo. Needless to say, being some distance from anything even remotely resembling a TV studio made the invitation impossible to accept and the Maria moment flew as fast as it arrived.

Still, it was nice to be asked. Some people return from a week in the wilds with a big fish story. I have my Maria story.

Judge Strine Agrees About Role of BCE Board

Last month we raised concerns that BCE’s management —rather than its board— appeared to be leading the auction process that the company had embarked upon. Some days after our posting, the board issued its first statement about the process and made it clear that it was in charge. We see from yesterday’s Globe and Mail that Judge Leo Strine of the Delaware Chancery Court has similar views on the role of the board in the kind of events now unfolding at BCE:

Judge Strine says boards today have to take control of negotiations immediately because managers run the risk of being biased in favor of powerful private equity buyers that typically offer rich contracts for the bosses to remain if their bids succeed. Another worry is the reluctance of private equity buyers to compete with each other in takeover auctions, thereby limiting the potential for bidding wars.

Judge Strine’s observations about boardroom conduct should make directors at BCE Inc. blanch. The communications company’s board waited until last week to form a special committee of directors to oversee takeover talks, months after private equity buyers had come calling and more than a week after New York buyout giant Kohlberg Kravis Roberts & Co. collared three of Canada’s largest pension funds for a syndicate that is studying a potential takeover.

Judge Strine is not advancing new law. For at least two decades, the Delaware court has followed the position that boards, and especially independent directors, must ensure fairness, value and objectivity when a company finds itself, or places itself, in play. It evolved out of the early days when corporate raiders threatened to upset management’s grip on power, prompting management to find more friendly suitors —occasionally at the expense of the best deal for shareholders.

An interesting side note— our comments on the tardy entry of BCE’s board were also made to newspaper reporters before they were even introduced here. Apparently they weren’t seen as an issue by the reporters who had called me and there was no mention of this concern appearing anywhere prior to its being raised at Finlay ON Governance. It’s another example of where blogs often outpace more turgid mainstream media, and where reporters are often less clued in to the concerns of ordinary stakeholders and investors than they profess to be, and the practices of sound corporate governance than they ought to be.