At a breakfast panel five years ago inside Torys LLP's Toronto head office, Ontario Justice H.J. Wilton-Siegel really stepped in it. As a guest at his former law firm, the judge unexpectedly stole the show by speaking up from the audience about Frank Stronach's prodigious payout from Magna International.
Justice Wilton-Siegel, you see, was the guy who approved the plan of arrangement that handed King Stronach $863-million in exchange for voting control of his auto-parts giant. Even though the massive cheque had been in the news for months, Bay Street still had a lot of unspoken feelings about it – and, apparently, so did he. Piping up from the crowd, the judge argued that Magna's board "did rather spectacularly vacate the field" by putting the payment to a shareholder vote, effectively punting its responsibility to review the payday.
All these years later, those words might not carry as much shock value. Time has a way of dulling sharp edges. But this was the judge who presided over the case. And his comment came at a time when few people dared say anything negative about the cheque. Even the Ontario Securities Commission, which formally reviewed the file, had largely stayed mum.
In the legal community, some people treated Justice Wilton-Siegel's commentary as a severe case of speaking out of school. I have a much different view. Good on him, and anyone else who does the same – Canadian business needs a few loose lips. We've been losing them too quickly.
Until recently, Canada had a reliable cast of shooters who would happily speak their minds. Think pension plan titan Claude Lamoureux or investing legend Stephen Jarislowsky or former Toronto-Dominion Bank chief Ed Clark. Over the past decade, most of their ilk have retired or taken a step back, leaving a vacuum in their wake. The next generation of bigwigs, it seems, is much more meek.
It used to be that our bank chiefs would stand up at their annual general meetings and rant about serious, meaty issues. In 1992, Royal Bank of Canada chief executive officer Allan Taylor famously delivered a speech called The March of Folly, speaking out against Quebec separatism. And our pension funds and high-profile portfolio managers would give frank assessments of hostile takeover bids or outrageous executive compensation. Today, too many prefer to wage silent wars, somehow believing that "withholding" their votes is a strong enough scare tactic.
Some of this can be chalked up to Canadian culture. We are a polite country, prone to saying sorry. But there's something deeper, something systemic about it, too. Nowadays, people seem much more reluctant to speak up. They'll talk about broad issues, such as so-called "quarterly capitalism," but rarely speak to individual, hot-button topics.
There's a running joke among reporters. After a new merger or acquisition is announced, everyone wants to know what the biggest shareholders think. Putting in calls to them has become a futile exercise. If you're lucky, you may get an off-the-record comment or two; for the most part, you get the cold shoulder. This silent treatment happens with more frequency now that the Big Six banks dominate Canadian mutual funds. Their portfolio managers are almost never allowed to speak their minds.
Which is why the recent fight between Suncor Energy and Canadian Oil Sands was so refreshing. Because you know who owned a big chunk of COS? Seymour Schulich – one of few remaining savants from the old guard. Let me tell you, he was not afraid to speak his mind. Not even if it meant calling from a yacht.
By no means should we aspire to emulate the U.S. system, where hedge fund managers masquerade as corporate saviours and overpaid CEOs think they can bully the U.S. president. In many respects, I actually prefer the Canadian way of doing things. There's some class to it. Canadian banks will privately complain about their federal watchdog, but they still meet with the Office of the Superintendent of Financial Institutions regularly to keep the financial system in check.
For some reason, though, we're overly cautious. The banks are so buttoned down about these meetings that they won't even disclose, say, the minimum capital levels OSFI holds them to.
There are ways to speak up respectfully, while showing flair. Chief Justice Leo Strine of Delaware's Supreme Court has long made it a goal to prove judges aren't boring. His commentaries are notable for anecdotes and one-liners. On the subject of news leaks by M&A bankers, he once said: "Whoever makes Depends would have a good business alone because of bankers." But he's still incredibly well-respected. That should put Justice Wilton-Siegel's comment in a new light.
We also forget there are ugly consequences to Canadians' silence. When powerful people are too placid, it leaves room for self-centred activists, who push for silly corporate breakups and share buybacks, to steal the microphone, acting as if they're the only able change agents. To get ahead of the problem, Canadians need to speak up – just a little.