The Globe and Mail’s annual review of corporate governance in Canada shows the newspaper shares many traits with the incurious, self-satisfied boardroom.
More about the tough life of sacrifice and service in the boardroom is found in The Globe and Mail’s yearly review of the state of corporate governance in Canada –a report whose annual rankings of its version of the best and worst boards produces cheers from the top, boos from the bottom, and a big yawn from all those in the centre. The piece begins by reporting how David O’Brien, a director of many prominent companies, had to interrupt his safari in Kenya in order to participate by satellite telephone in a board meeting. No doubt Mr. O’ Brien would have been celebrated for his heroic efforts on his return to the Toronto Club. And you thought the life of a single mother balancing a job, household expenses and two young children was tough. Where do they find such people?
As it has for the past several years, The Globe and Mail trots out an annual procession of the same actors to give voice to the same thoughts: Corporate governance is more important than ever and real changes are underway. There is always the caveat from some director that we need to take care not to go too far. Oh yes, and what a shame there are not more women at the director’s table, but progress is being made. You will not find anywhere in the story the words of the average stakeholder or small investor who might actually speak in an authentic voice and be less inclined to talk in the predictable platitudes that the newspaper serves up from these main boardroom players. And you will not find this cast of directors shedding any light on why it took the worst series of boardroom scandals since the Great Depression before they realized the obvious, why they pay themselves so much more now than in pre-Enron days when directors were insisting that they were working as hard as possible, or why board members on whose watch companies fall into scandal and disrepute are continually being appointed and re-appointed to more boards.
The creation of a self-regulatory organization (SRO) for directors which would hold them to a rigorous standard of professional conduct and have the power, in effect, to disbar violators from serving on a board –an idea which The Centre for Corporate & Public Governance conceived and promoted in submissions to legislative committees in Canada and the United States some years ago– is not even on the directors’ (or the Globe’s) governance navigation system. What these directors are doing today to empower shareholders more fully remains an unexplored topic as does any meaningful discussion of excessive CEO pay, mainly I suspect because so many directors have been beneficiaries of the existing wave of insanity; our safari-going Mr. O’Brien, for instance, was one of the top paid CEOs in Canada a few years ago when key operating divisions of Canadian Pacific were spun off under his leadership.
It is perplexing in the 21st century, when so many citizens, consumers, employees and investors have a genuine stake in the quality of corporate governance and the decisions boards make, that the term “stakeholder” does not even appear in the story. The concept of stakeholder capitalism, a term I coined in the 1980s, has been established well enough to at least warrant some discussion, as it really does go to the heart of a board’s wider mission and responsibilities today.
Many of Canada’s top directors, like those quoted in the piece, have sat in the boardroom year after year—some for decades. Many were fully capable of standing up and bringing about change before disasters like Enron, WorldCom, Hollinger and Nortel struck, when it was first required and when shareholders and other corporate stakeholders really needed it. Most did not. They could have taken an early prominent role when the disclosure requirements of the Toronto Stock Exchange (TSX) corporate governance guidelines were repeatedly ignored by hundreds of listed companies. None did. The subject of excessive CEO pay, an issue upon which so much of capitalism’s credibility is being tarnished and a gathering cloud of ill will is forming, needs champions of change and restraint in the boardroom. They have not yet arrived. It is difficult to have confidence that these same directors are the ones who can now look into the future and say which seeds will grow and which will not, to borrow from Shakespeare.
In its annual pilgrimage to Canada’s boardrooms, The Globe and Mail appears to be taking its cue from that very institution where the tough questions so often go unasked and unanswered. It seems that with each new owner, the Globe’s once iconic reputation becomes more watered down and more accepting of the status quo. And like the boardroom, the Globe seems to be more comfortable dealing with the same individuals year after year (some of whom I have known and liked on a personal basis over several decades, but that really is beside the point) rather than seeking out a more distinct source of unconventional boardroom wisdom. There is no law as far as I am aware that requires directors to speak as a chorus in constant unison; a few solos can still get the job done and at the same time strike a more human and evocative note. And I can report from personal experience in venture capital circles and elsewhere where ideas really matter, that to the innovative and ethically driven minds that are changing the landscape of business (and society) in remarkably constructive ways and whom I am privileged to interact with on a daily basis, the repetitive self-congratulating voices of the old boardroom guard are about as irrelevant, unnoticed and uncool as a basement mimeograph machine.
Lack of curiosity for the unexpressed forces of impending change and exclusive embrace of the group mindset are attributes of neither sound journalism nor the well-governed corporation and, indeed, have left both institutions reeling from the consequences of their absence.
Disclosure note: I was an early proponent of an annual assessment on the state of corporate governance in Canada, having written on the subject in the op-ed pages of The Financial Post, The Globe and Mail and elsewhere since the 1970s and having been quoted extensively on related news items by reporters in those publications. In 2002, when The Globe and Mail was considering the idea, I was asked early in that process for my advice (given pro bono) as to the kind of issues and themes it should address, and was interviewed at length in the inaugural edition.