In a year of economic turmoil, tight credit and volatile stock markets, it's easy to imagine corporate directors could have a lot more on their minds than issues of corporate governance. But many of Canada's most senior directors have told Report on Business they believe good governance is never more important than in difficult times. A good board today is weighing risks, safeguarding cash and managing compensation, they argue.
In the seventh annual instalment of ROB's influential Board Games report, we look at governance in a bear market and hear from experts about whether the turmoil on Wall Street will spur further governance reform.
The extensive package of coverage also examines the trend toward embracing corporate social responsibility, a broad label for many social and environmental initiatives under way in corporate Canada. We question how shareholders judge whether it's real change or just empty talk. We also profile one income trust, Primaris Retail REIT, that has placed a particular focus on corporate governance, overcome criticisms from those who dislike trusts run under contract by external managers.
Janet McFarland was online earlier to talk about this year's rankings. Your questions and her answers appear at the bottom of this page.
Ms. McFarland joined Report on Business in 1995, and has specialized in reporting on corporate governance. In 2002, she and colleagues launched Board Games, an annual review of corporate governance practices of Canada's largest companies. Board Games is now in its seventh year.
During her tenure at the Globe, Ms. McFarland has written extensively on issues of governance, leadership and executive compensation. She also covers securities industry regulation and enforcement, including activities of the Ontario Securities Commission.
Ms. McFarland was born in Saskatchewan and received a journalism degree from Carleton University. She also completed a graduate diploma in international relations at The London School of Economics.
Before joining The Globe and Mail, she worked as a news reporter at The Winnipeg Free Press and as a business reporter at The Financial Post.
Editor's Note: globeandmail.com editors will read and allow or reject each question/comment. Comments/questions may be edited for length or clarity. HTML is not allowed. We will not publish questions/comments that include personal attacks on participants in these discussions, that make false or unsubstantiated allegations, that purport to quote people or reports where the purported quote or fact cannot be easily verified, or questions/comments that include vulgar language or libellous statements. Preference will be given to readers who submit questions/comments using their full name and home town, rather than a pseudonym.
Virginia Galt, globeandmail.com: Good afternoon, Janet. Thanks for joining us today for a conversation about corporate governance and Board Games 2008.
As you reported in today's Report on Business, Canadian boards of directors are facing a serious test as times get tough. You found that risk management is the new priority. But just how difficult is it to manage risk in the current economic environment?
Your quote from Nexen chairman Francis Saville was telling: "Put yourself on a board, I don't care what company it is, as we come up to the budget period for 2009. Tell me what price you'd use for crude for 2009. And what exchange rate? We have to land on a number . . . It's not easy. And all you know for sure is that you'll be wrong," Mr. Saville said.
How should boards go about facing these new challenges?
Janet McFarland: Hi Virginia. Thank you so much for inviting me to participate in this chat today.
Your question is the big dilemma facing corporate boards right now. After years of boom, directors are quite suddenly facing an all-new economic environment. Based on my conversations with some senior corporate directors, the good news is that boards certainly seem to be well aware of their responsibility to manage the crisis.
Directors say there is no more important topic right now than risk management, which is the whole process of identifying a company's key risks and sorting out how to respond to them. Directors say they are all meeting with management and going through the top 10 or 20 risks facing their companies, and discussing how to deal with each of them.
