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.


The board says it continues to stand behind current management, led by CEO Vikram Pandit.  But can a board stand up while sleeping?   This is a question investors must ponder.

If you are wondering how Citigroup could have lost tens of billions, seen the value of its stock pared by more than three-quarters, and required taxpayer guarantees and capital injections mounting into the hundreds of billions, look no further than two figures who have played a prominent role in defining the Bank’s corporate governance culture.

Prince Alwaleed bin Talal bin Abdulaziz owns nearly 15 percent of Citigroup’s common shares and is the Bank’s single largest private stockholder.  Recently, the founder and head of Saudi-based Kingdom Holdings told CNBC:

Look, in the United States, the buck stops with CEO, period. The board of directors really, I will not say they are ceremonial, but really only the backup for the CEO. Now CFO is really the backup from bottom up and I would say the board of directors is backup for the CEO from up-down. At the end of the day, it is CEO and management team that runs the company. (CNBC transcript)

Thus the Prince dismisses the entire concept of boardroom accountability involving directors elected by shareholders, which has evolved over a couple of centuries. In that paradigm, the board holds ultimate accountability for the performance of the firm.  If the CEO is the final line of responsibility, as Prince Alwaleed asserts, shareholders really have no voice whatever.

This presents no particular problem for the Prince because his stake in the Bank gives him a direct line into the CEO’s office.  As he said in his CNBC interview:

I met with Vikram (Pandit), I’m always in contact with him, exactly like the Treasury and FDIC and the Federal Reserve are in touch with him.  (CNBC transcript)

Maybe if most ordinary shareholders could talk with and influence the CEO, their reliance upon an effective corporate governance regime would not be as pronounced. In the real world, however, there are few princes.  But his view no doubt accounts at least in part for the state of Citigroup’s weak boardroom.  If you have a key investor viewing directors as little more than a “backstop,” that fact is very likely to be reflected in the corporate governance culture.

The other face that has become synonymous with Citigroup’s governance is Robert E. Rubin.  He has been a director since 1999.  He has also been a member of the Bank’s management -a very well paid member of management- during that same period, when he received $115 million (exclusive of stock options).  And here is where things get murky.  Mr. Rubin, until August of last year, was chairman of the board’s executive committee.  But it seemed to function as much as management’s executive committee.  The board didn’t even bother to disclose the number of meetings the executive committee held in 2007, unlike its practice for other committees.

Faced with hard questioning on his role during Citigroup’s meltdown, Mr. Rubin told the Wall Street Journal in November:  “The board can’t run the risk book of a company.  The board as a whole is not going to have a granular knowledge of operations.

It might take an exceptional board to fathom the grains of detail that confront management on a daily basis.  But it would take a spectacularly inept collection of directors not to see the 800-pound gorilla confronting Citigroup’s boardroom in the form of strategic risks and over-leveraging that threatened the Bank’s very existence.  

The other problem in Mr. Rubin’s explanation, of course, is, as we have previously noted, Citi’s board had four insiders on it.  Mr. Rubin was one of them.  As a member of management, he might have been expected to see things that more distracted independent directors could not see in terms of risk and leverage levels.  There is no evidence that he did.

Citi’s directors were content to have a higher proportion of insiders on the board than most governance experts consider healthy, and were happy to have the board headed by another insider (Sir Winfried Bischoff) as well as the executive committee chaired by Mr. Rubin, the ultimate Citigroup insider.

Perhaps the board and Mr. Rubin were one with the view expressed by Prince Alwaleed that their role was really only ceremonial and a backstop to the CEO.  Why they might be collecting the hundreds of thousands -and in some cases, millions- each one has received over the past few years leading up to the current crisis neither the Prince nor anyone else seems prepared to say.

One cannot be entirely surprised that, as a member of a royal family in a country where monarchs reign supreme and notions of accountability, transparency and democracy are as rare as a snowfall in December, a Saudi prince places his stock in the idea of an imperial CEO.  But the bobbing and weaving of Mr. Rubin in his efforts to dodge accountability for the destruction of wealth that occurred on his watch, the ambiguity of what he did and what he got paid for, the confusion as to whether he was acting as a director or a member of management and what diligence and responsibility he was expected to bring to the table –all these give a troubling picture of an important player in the Citigroup boardroom.  They place Mr. Rubin in an unseemly light, which is doubtless one of the reasons why he has chosen to resign his position within Citigroup’s management and not to stand for reelection to the board in April.  But all these events taken collectively say much more about the board itself and its understanding, or more accurately, misunderstanding, of its duties.  Its stock, which has lost more than three-quarters of its value in the past 52 months and today stands perilously close to collapsing into the five dollar range again, reflects this view.  Titanic losses are said to loom on the horizon.   More capital is required.  

The board says it continues to stand behind current management, led by CEO Vikram Pandit.  But can a board stand up while sleeping?   This is a question investors must ponder.

Well over a century ago, the obligations reposed in a bank’s board were set out in a landmark case.  The distant voice of the U.S. Circuit Court court serves as a poignant reminder to directors today.

The duty of the board of directors is not discharged by merely selecting officers of good reputation for ability and integrity, and then leaving the affairs of the bank in their hands, without any supervision or examination than mere inquiry of such officers, and relying upon their statements until some cause for suspicion attracts their attention.  The board is bound to maintain a supervision of the bank’s affairs, to have a general knowledge of the character of the business and the manner in which it is conducted, and to know at least on what security its large lines of credit are given.