Geoff Beattie is chief executive officer of Woodbridge Co. Ltd., a private holding company that manages the assets of Canada’s Thomson family, including a majority stake in global information company Thomson Reuters Corp. and a stake in a consortium that owns The Globe and Mail. He is a member of the boards of Thomson Reuters, General Electric Co., Royal Bank of Canada and Maple Leaf Foods Inc.
You said you have a controversial opinion – what do you mean?
I’m against the big movement of splitting the roles of CEO and chairman as a prescriptive rule or as a good governance rule. I think it’s a good business rule in lots of instances, and I think it’s an equally good business rule in many instances to have the CEO and chair in the same person.
In what instances?
For example, when you have large, complex businesses like the big banks, or IBM or GE, etc., I want my CEO to have the package of skills and experience that enables him to not only be an effective manager with his executive team but an effective chairman with his board. Because nobody brings a stronger level of understanding or knowledge to the business [than] a CEO. And to not let the most experienced and knowledgeable person set agendas and chair meetings in order to ensure directors can do their job is insane.
People say an independent chair acts as a check on a CEO becoming overly dominant.
I see the opposite happening. The chairman ends up going native, with the CEO to be perceived as saying, “Don’t worry, I’m not going to let this board beat you up.” What [governance experts] miss is that this wasn’t about putting a non-executive chairman in place, it was holding CEOs accountable. The thing I see about not having them in the chairman role is you’re kind of letting them off the hook for a huge aspect of the business they should be accountable for. It’s like saying, “I don’t have influence over the board for this or that or anything.”
What makes a CEO better as a chairman?
My experience now is that with a good chairman/CEO model, the CEOs as chairmen are way tougher on themselves around compensation than [in] the split model because of the changing times around compensation. It’s not about the structure of the board.
Really? Doesn’t it make it easier for a CEO to entrench control?
There’s a bigger issue around people entrenching control in this day and age around multiple voting. … Somebody’s got 90 per cent of the control and 10 per cent of the stock. You sit back and you say to yourself, ‘Would anyone allow that to happen now as a starting point? Could you finance off a structure like that today?’ The answer is probably no.
But Thomson Reuters is a relatively rare case where a huge company is controlled by a family, but that family actually owns a majority of the shares outright. You don’t think the rules give majority shareholders enough credit?
We have a very hard time convincing people that our motivation to ensure share performance exceeds anyone else’s, because we have a more concentrated portion of our wealth sitting there – $18-billion or $20-billion tied up in one company. All the corporate governance types are saying, “Geoff Beattie can’t sit on the [compensation] committee. He’s not independent. He can’t sit on the audit committee.”
But you’re saying you’d have every reason to be concerned if someone was cooking the books?
Nobody gets hurt more than us on a proportionate, absolute or relative basis. Yet the rules are clear. The reason nobody fights against this stuff is because it’s “Thou dost protest too much, and there must be a reason why you want it so badly.”
