University of Alberta Faculty of Law Blog

Say on Pay

The Swiss are the latest to embrace the latest fad in corporate governance, namely 'say on pay'. This may lead to an exodus of companies from Switzerland, but the question then is to where? Europe is hopping on this bandwagon, as the story points out, and the US is coming close to one through the Dodd-Frank requirements. Although non-binding now, 'say on pay' could become binding one day in the land of the free.

So how about moving to Canada? Although Canada has seen some movement towards that, both corporate and securities law in Canada are still provinical (with a federal corporate law that does not pre-empt the provincial statutes).

One province can take the initiative and create a more hospitable environment, and boom we have a whole lot of Swiss and possibly American companies listed. Now who will take that initiative?

Ethical Coke

The top dog at Coca-Cola sat down for an interview with the Financial Times. In addition to having an interesting background, history, and outlook, I was impressed by this question and his answer:

In recent years business schools have put greater emphasis on ethics  and corporate and social responsibility. Is this something that can and should  be taught?

Read his answer and the rest of the interview - it is quick and interesting.

Nortel: Another victim of Enron?

Yesterday, Ontario Superior Court Justice Frank Marrocco dismissed fraud charges against former Nortel CEO Frank Dunn, former CFO Douglas Beatty and former controller Michael Gollogly. It represents yet another high-profile not guilty verdict in a Canadian "white-collar" criminal trial.

National Post columnist Terence Corcoran has described the prosecution of the Nortel executives as a "corporate witch hunt" prompted in part by "post-Enron regulatory overkill". Whether or not this is a fair characterization, it seems likely that how Canadian regulators, investors and the general public reacted to Nortel's accounting...er..."irregularities" was coloured in part by the accounting scandals of what has come to be known as the Enron era.

The lesson that Canadian business executives might wish to take away from the Nortel example is the importance of trust. Specifically, the importance of having the trust of regulators, investors and the general public, so that when an event occurs that could be interpreted in two different ways, one benign and the other malignant, the company will be given the benefit of the doubt. How corporate executives are to win back this trust in our current post-Enron, post-financial crisis, post-Occupy age is unclear, but moving away from "aggressive" accounting practices might not be a bad place to start.

Corporation not a person?

A court held that a corporation is not a person. Boy that was news to me. Then, I read that the case involved the following scenario: A man is driving a car alone in the carpool lane. He gets pulled over. He hands his company's incorporation papers over arguing that the papers represent his corporation, and hence he has a second passenger. Needless to say the traffic court judge did not agree. I say, needless to say, because traffic court judges don't usually accept novel arguments. That is what appellate courts are for, an avenue the driver will pursue - needless to say.