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.

At what point will law makers, regulators and investors see that the so-called link between performance and high CEO pay is one of the greatest hoaxes ever perpetrated on the American public?

When the House Committee on Oversight and Government Reform meets today on the subject of CEO pay as it relates to Countrywide, Merrill Lynch and Citigroup, its attention will no doubt be turned to a stunning and illustrative example of the warped thinking that permeates too many boardrooms today. It comes in the form of a 2006 message which Countrywide CEO Angelo Mozilo wrote to his personal compensation consultant (who was paid for by the company):

Boards have been placed under enormous pressure by the left wing anti business press and the envious leaders of unions and other so called “CEO Comp Watchers” and therefore Boards are being forced to protect themselves irrespective of the potential negative long term impact on public companies. I strongly believe that a decade from now there will be a recognition that entrepreneurship has been driven out of the public sector resulting in underperforming companies and a willingness on the part of Boards to pay for performance.

(E-mail from Angelo Mozilo to John England, Oct. 20,2006)

In fact, Countrywide’s CEO and its board were obsessed with the subject of CEO pay and have devoted considerable energy to that topic. As we pointed out some months ago, Countrywide’s compensation committee met a staggering 29 times in 2006, according to the company’s 2007 proxy statement.

We’ve also observed what we have called Mr. Mozilo’s miraculously timed stock sales beginning in late 2006 and all through 2007. The exercise price for his stock was considerably lower than the trading price at the time. In 2007 alone, Mr. Mozilo received about $120 million in the form of compensation and proceeds from the sale of Countrywide stock.

So here’s a question: Since Mr. Mozilo was paid nearly a quarter of a billion dollars from 1999 to 2007 (House Committee figures), was it the “left wing anti business press” and “envious” union leaders who were responsible for the company’s losing $1.2 billion in the 3rd quarter of 2007 and a further $422 million in Q4? If he had been paid more, would the company have underperformed less?

As we noted previously in connection with our submission to the U.S. Senate banking committee in 2002 during its hearings into the Enron collapse and related scandals, 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.”

When the dysfunctional state of executive compensation can produce the kind of screwy investment vehicles that were based on the wildly unrealistic subprime market, without proper consideration for their longer run hazards because CEO pay is so tied to short-term gains, and place the entire economy at risk of recession, the public at large, and not just company shareholders, has an undeniable stake in the efficacy and soundness of corporate compensation decisions.

America, and by extension much of the industrialized world, is today facing the worst credit disaster since the Great Depression. The crisis was prompted by the failures related to subprime mortgages and the myopic machinations that financial institutions engaged in to push out these toxic investment vehicles to unsuspecting clients. This took place at a time when the greatest transfer of wealth was occurring between CEOs and shareholders in the history of modern capitalism.

At what point will law makers, regulators and investors see that the so-called link between performance and high CEO pay is one of the greatest hoaxes ever perpetrated on the American public?