HP | The Finlay Centre for Corporate & Public Governance

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.

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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.

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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.

HP’s Board Leaps Backwards — Again

Another costly blunder from corporate America’s most dysfunctional, discredited and disdained board

HP’s board took another gigantic jump backward today. It’s not so much that it fired one CEO and hired another. People have come to expect that on a regular basis from what has become corporate America’s most dysfunctional, discredited and disdained board.

It is the shell game involving HP’s chairman that should prompt eyebrows to be raised even higher. Ray Lane was the board’s non-executive chairman and played the largest role in the appointment of Meg Whitman as new CEO. Now, he’s jumped inside, this time to become executive chairman of the board, with a much bigger payday as part of the deal. We are unaware of any comparable situation where two outside directors suddenly have become insiders, one as CEO and one as head of the board she reports to. Is this marriage of convenience the main reason why there was no full search for a new CEO? Is it just one more sign of a cozy club mentality at work in a boardroom where accountability has been the missing voice? We think so.

We also believe it is a further step in the wrong direction for the board to think that a lead director, yet to be appointed, will be able to provide the necessary focus for checks and balances that is so important to its fiduciary responsibility. No lead director has ever prevented disaster from occurring in any major company. It is bad corporate governance, pure and simple. For a company whose most costly product has been disaster, with billions in shareholder value wiped out over the past year alone, HP’s board obviously still does not get the fundamentals of how to execute on its significant responsibilities.

HP’s formula for a turnaround must include the highest standards of corporate governance, not the lowest. The rather large shell game it engaged in by turning a so-called non-executive chairman into an insider as part of the package that brought its newest CEO into the room shows that it does not even know where the switch is to turn that process on.