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 Cisco move is just the latest example of companies that put too much time and creativity into dreaming up elaborate financial schemes —schemes which, by some remarkable consistency of nature, always wind up adding to the CEO’s pay package.

I am not a big fan of company stock repurchasing. While I am the first to admit that today’s global corporations are complex institutions on almost every level, including financial, I think stock buybacks often drain potentially valuable funds that could be put to better use in research or in adding value to the traditional business chain, and serve to benefit insiders and the investment bankers arranging the deals more than anyone. One of the pluses that private equity advocates often talk about is that corporate funds for unlisted companies don’t need to be diverted into exercises like buying  back stock because the price can’t be raised any other way.  I don’t usually align myself with the private equity crowd, but on this point they seem to make sense.

And so it was with a somewhat jaded eye that I read of Cisco Systems’ plans to add billions to its already lavishly endowed program to buy back its stock. It just kicked in $10 billion more to an already huge $52 billion pot. And who do you suppose will come off best from the deal? How about Cisco insiders, like CEO John T. Chambers, who typically receives most of his compensation in the form of stock options. The company’s 2007 proxy circular notes:

During fiscal 2007, as part of the on-going companywide grant, the Compensation Committee granted Mr. Chambers an option to purchase up to 1,300,000 shares of Cisco common stock at an exercise price of $23.01 per share…. The option grant places a significant portion of Mr. Chambers’ total compensation at risk, since the option grant delivers a return only if Cisco’s share price appreciates over the option’s exercisable term.

In September 2007, the Compensation Committee also made an annual stock option grant to Mr. Chambers to purchase up to 900,000 shares of Common Stock, and the right to receive a target of 200,000 future restricted stock units based on Cisco’s financial performance in fiscal 2008.

So we have a situation at Cisco where the CEO, who also chairs its board, stands to gain significantly from a buy-up of stock that is being paid for with shareholder money from a company where the CEO is the chief decider on how it is used. An interesting moving around of the financial shells on the boardroom table, don’t you think?

The old fashioned idea of issuing a dividend —one that worked very well in the era of the Fedora CEO, as I have affectionately called them— is just too passé for Cisco. They don’t do dividends. I guess that would be too much like something that could benefit all investors in equal proportion to the shares they actually own —not the shares that might be bought on a discounted basis by a lucky CEO if things pick up.

The Cisco move is just the latest example of companies that put too much time and creativity into dreaming up elaborate financial schemes —schemes which, by some remarkable consistency of nature, always wind up adding to the CEO’s pay package— when the time and creativity and investment banking costs could instead be used for purposes of product innovation, employee education and in finding better and more efficient ways to add value to the customer.