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.

Boards don’t just anoint an emperor CEO and remain a hapless bystander of events. Their job is to assess and oversee issues of risk, as well as the CEO’s performance.

First it was Warren Spector, co-president of Bear Stearns. Next it was Merrill Lynch’s E. Stanley O’Neal. Yesterday it was Charles O. Prince of Citigoup. In the space of a few months, the subprime meltdown that is producing calamitous losses in the banking and financial services sectors is also producing suddenly-empty corner offices. More will doubtless follow. But isn’t there an idea that maybe boards have some role in helping to prevent these disasters, too? They don’t just anoint an emperor CEO for a period of time and remain a hapless bystander of events. Their job is to assess and oversee issues of risk as well as the CEO’s performance. It seems too many boards have been a little slow to adjust to that heightened level of responsibility.

We have always taken the position that neither success nor failure is a one-man product in today’s multibillion dollar global corporation. Of course, it is harder to excuse a CEO who is making stupid mistakes or issuing comments that are so at odds with reality that it becomes impossible to have confidence in his sense of vision and judgment. This was the case with Mr. O’Neal’s previous pronouncements that things were looking OK with the subprime situation at Merrill Lynch. And we expect it will also be the case with Bear Stearns’s Jimmy Cayne, who rode out that company’s summer hedge fund storm in the calm of a golfing and bridge tournament vacation and who may yet learn that, in the department of CEO appearance, a corporate crisis always trumps a card game. Others will surely fall before the latest turmoil is quelled and the surprise-o-meter is likely to get quite a workout when all is said and done. And though he still clings to power, Countrywide Financial’s CEO has much to answer for in regard to that company’s huge losses. I recently made some observations about Countrywide’s dubious boardroom practices in a guest column in the corporate governance blog of Harvard Law School.

What Citigroup, Merrill Lynch and Countrywide also have in common, on top of their staggering reversals of fortune, is that their CEOs head —or headed— the board. That, I submit, can be taken as further evidence that the positions of CEO and chair need to be separated if boards are to be truly empowered and independent in fulfilling their governance duties. The Centre for Corporate & Public Governance has been advancing the principle that boards should be chaired by an outside director for more than a decade and a half before legislators, regulators and among investors.

The notion that a so-called lead director can fill that need, as suggested recently by Yale School of Management’s Jeffrey A. Sonnenfeld in connection with Merrill Lynch, runs counter to both the reality of the modern boardroom and its past. The lessons of history and of business demonstrate convincingly that whenever other people’s interests or money are involved, a strong discipline of accountability is paramount. Checks and balances on power are always an indispensable feature in the governance of corporations as well as in nations. Their absence has been associated with untold tragedies and follies in both institutions. The reason the business titan wants to hold the combined positions of CEO and board chair is because he wants power concentrated in his hands for all meaningful purposes. He is not about to turn over any significant role to a lead director, which is a position a little like the runner-up in the Miss America contest. Its importance is always greatest at the time of its awarding and thereafter seldom amounts to anything—except in the unlikely event that fate and catastrophe choose to embrace. At least in the case of Miss America, the runner-up typically has no role in bringing about the disaster, which is not always the situation with the lead director and his colleagues in the boardroom.

We know that these parting CEOs will be treated very nicely and will leave, in some cases, with more than $100 million for their trouble. Less certain is whether directors are really on top of the huge risks these companies are assuming and whether boardrooms were really flying on autopilot for the past several years when things were looking so good. And autopilots have been known to have had a rather sleep inducing effect on more than a few occasions.

You can hear the story that boards are now awakening to their duties only so often before you get the feeling that there must be a lot of sleeping going on most of the time.