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.

Last week we had some thoughts about Countrywide Financial’s subprime corporate governance and the phenomenon of miraculously timed stock sales on the part of CEO Angelo Mozilo. For him, the miracle was in pocketing millions from the sale of his shares just months before the subprime disaster jolted the market and hammered its stock. In certain respects, Mr. Mozilo seems to share the same uncanny knack for knowing just when to sell before calamity strikes that brought Enron’s Ken Lay, WorldCom’s Bernie Ebbers, ImClone’s Sam Waksal, Nortel’s John Roth and a host of other CEOs to heightened public attention. What a shame these remarkable gifts of CEO prescience never seem to translate into a talent that helps companies steer away from impending disaster and thereby allow other investors and customers to benefit. Countrywide’s stakeholders could have used such an edge.

Now it seems that others have also noted Mr. Mozilo’s extraordinary ability but are taking a rather more skeptical view of it. North Carolina State Treasurer Richard Moore has asked the SEC to investigate Mr. Mozilo’s sale of large blocks of company stock just before the recent meltdown. Frankly, I have never understood why, when the top man begins to move into the lifeboat before the women, children and others, it is not taken as a clear sign by investors that the fatal iceberg lurks not far away.

Under the revised 105b-1 plan, Mr. Mozilo continues to sell hundreds of thousands of shares. With a strike price of just over $9, he can still make millions in profits even from the stock’s currently depressed level of about $18.80. It looks rather like a CEO who is indeed bailing out. If he had confidence that the stock would rise, conventional investing wisdom teaches that he would be more likely to hold on to what he has. What do you suppose would happen if other shareholders followed Mr. Mozilo’s lead? Or would this be one of those cases when the leader is saying ‘do what I say, not what I do’?

Mr. Moore, who gained prominence with his groundbreaking lawsuit against tobacco companies and won the largest settlement of its kind, won’t be easy for the SEC to dismiss. His state holds more than half a million shares. Here is part of what he said that strikes a particularly strong chord with us:

As an investor and a Countrywide shareholder, I was shocked to learn that C.E.O. Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide’s fortunes were cooling off.

As we noted last week from our submission to the U.S. Senate banking committee in 2002, in the past the lure of huge stock option packages has “tempted many CEOs to artificially push up the price of the stock in ways that cannot be sustained, and to cash out before the inevitable fall.”

Whether or not Mr. Mozilo did anything wrong will be for regulators to determine. Investors, however, are able to make a more immediate decision from what they have read and seen about the company as to whether Countrywide has the kind of leadership and corporate governance that makes the risk worthwhile. For his part, Mr. Mozilo apparently plans to make millions more by continuing to exercise stock options and selling hundreds of thousands of shares over the next several days even though these options do not expire until 2011. Countrywide’s third-quarter earnings, however, are set to be released later this month.

Now what do you suppose they are likely to reveal?