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The Director’s Chair, a special dialogue feature with noted

Canadian directors by governance expert and leadership
advisor David W. Anderson, will appear in every issue of
Listed. For his first instalment, Anderson traveled to Calgary
to interview Richard Haskayne, illustrious six-time company
board chair, CEO and company director. Haskayne’s already
written his life story in Northern Tigers: Building Ethical
Canadian Corporate Champions, but after leading the boards
of TransCanada, TransAlta, MacMillan Bloedel, Nova and
Fording, and serving on 20 public company boards in all, he
could also write the definitive book on being a corporate chair
and the state of boards in Canada today.Anderson taps into that
knowledge and experience in a wide-ranging interview.

Richard Haskayne
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The Director’s Chair
;Xm`[N% 8e[\ijfe You were CEO of Interhome Energy until 1992 and
before that, Home Oil. Did being a director on other boards make you a
better CEO?
I`Z_Xi[?XjbXpe\ Yes, it gave me a broader perspective as to what others’
issues were. I recommend it. A CEO should participate on one or two
boards. I limited myself to three, based on the similarity of the company to
my business and its location, which determined the travel demands.
I think CEOs can get myopic without board exposure. A CEO can
think the world revolves around his or her industry. I was in the energy
business—yet I became a director of CIBC and Manulife in financial
services. From my diverse board service, I got a different perspective on
my business, based on these companies’ size and scope (domestic vs.
international). I also picked up insights on governance matters that apply
to any company—for instance, how they approached issues of CEO evalu-
ation and compensation.
How do you decide if you should
sit on a particular board? Look at the
stature of the company. The worst
thing one can do is to be involved in
a company with a bad reputation
;Xm`[N% 8e[\ijfe What draws you to board service?
I`Z_Xi[?XjbXpe\ It’s important to always seek to broaden my own
knowledge. As a CEO, I knew a lot about my own business, but I wanted to
make sure I didn’t become insulated either within my organization or
industry. I sought to broaden my horizons and see how people handled things
elsewhere. I find this works the other way, too; I bring people from other
backgrounds to my boards. For example, when going through politically
challenging times in the oilsands and other environmentally sensitive issues,
the former CEO of MacMillan Bloedel helped us get insight into how to deal
with our circumstances, based in his experience in the forestry business.
In other cases, I’ve benefited from how companies face a variety of labour
relations issues—across provinces and countries.
;Xm`[N% 8e[\ijfe Do you have any reservations about board service
today—and how do you deal with them?
I`Z_Xi[?XjbXpe\ As a CEO, I was concerned about being overstretched
by board service. I didn’t want my own company to suffer. There’s even
more pressure today to make a contribution on a board, so CEOs have to be
very careful to prioritize and not let their own company down. In practice,
this means less board service for today’s CEOs.
I was also very much aware of conflicts of interest. I was on boards of
financial services institutions that at times made decisions affecting companies
I was involved with. I also sat on EnCana’s board while the company was
doing things in pipelines that were in direct conflict with TransCanada and
Nova. So I declared my interests and made sure I didn’t ask for or receive
inappropriate information. As a director, I was well served by professional
board staff who made sure I wasn’t exposed to information that would put
me in a conflict, and of course did not participate in discussions where there
was a conflict.
;Xm`[N% 8e[\ijfe When you’re asked to serve on a board, how do you
decide if it’s right for you?
I`Z_Xi[?XjbXpe\ I look at the stature of the company. The worst thing
one can do is to be involved in a company with a bad reputation—you’ll
be tagged with it. Look at the financial capability and track record of the
organization and its leadership. The management and directors already
serving will have a big influence on me.
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Beyond their good reputation, I think about the time commitment
needed to contribute, in part based on where I live and where the board
meetings are held. It’s also important to understand the expectations
regarding committee involvement. I like to be clear up front on expecta-
tions—both what the board wants of me and what I’m willing to give.
;Xm`[N% 8e[\ijfe What can a board do to signal it’s worthy of your
consideration?
I`Z_Xi[?XjbXpe\ Approach me in the correct way. Search firms are doing
a better job but they were slow in getting around to doing it properly. The
problem is they don’t tell you what you want to know: Who is it that’s court-
ing you? If the search firm won’t tell me I generally don’t want to spend
time on it.
;Xm`[N% 8e[\ijfe How has director search improved?
I`Z_Xi[?XjbXpe\ Boards have gotten better at providing more direction
to their search consultant. In particular, boards have broadened their scope
as business models change. For example, when TransCanada got involved in
the nuclear power business in Ontario, we needed people with that expertise.
Search firms press boards hard for what they’re looking for. Search firms
have learned director search is not like executive search, so applying their
old models doesn’t work.
;Xm`[N% 8e[\ijfe1What’s the best way to manage a board’s composi-
tion over time?
I`Z_Xi[?XjbXpe\1 People tend to stay on boards too long; it’s hard to ask
people to retire and they don’t know when to quit. Thus I’m a firm believer
in both mandatory retirement ages and term limits. Directors should retire
by 70 or 72. And 10 years of service is long enough. Similarly, CEOs of
widely held companies shouldn’t stay more than five to 10 years, as things
get repetitive.
;Xm`[N% 8e[\ijfe What’s your view on the quality of corporate
governance in Canada?
I`Z_Xi[?XjbXpe\ Canada has done the best job in the world in corporate
governance. We’ve come a long way and have been quick to adapt to
the realities of life. In the financial world, Canadian banks, along with
the Australians, have done best on account of good regulation and legisla-
tion and corporate boards that have operated well and put in place corporate
structures that reinforce accountability, such as having an independent
chair. The Americans have a tougher time accepting the notion of an
independent chair; on my Weyerhaeuser board, they finally agreed after I
had pushed for it for 10 years—but only after I retired.
;Xm`[N% 8e[\ijfe Why do you think Canadians have done well in
corporate governance?
I`Z_Xi[?XjbXpe\ One reason is that Steve Jarislowsky and others have
pushed for director education. The Institute of Corporate Directors, in
conjunction with The Haskayne School at the University of Calgary, plays
a part in meeting the big demand among directors for formal training.
Even experienced directors believe it’s helpful. You get to know what others
are doing on specific issues and have the benefit of networking with people
from across the country.
;Xm`[N% 8e[\ijfe You hold an “against the grain” view on multiple-
voting-class share structures. What’s your view?
I`Z_Xi[?XjbXpe\ Governance purity can get carried away. Many say
we shouldn’t have different classes of shares for voting purposes—that it’s
not democratic. But corporations aren’t democracies. Should ownership
be? When I look at the Canadian business landscape, I see we’ve lost many
corporate headquarters. We used to have the best mining companies in the
world based here. Now we’ve lost Inco, Alcan and Falconbridge. If it wasn’t for
two classes of shares, Teck Cominco wouldn’t be in Canada today. So effective
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control by a voting block can be useful. Of course there are trade-offs. But
as a Canadian, I resent the loss of leadership positions here and the lost invest-
ment opportunities. For example, I can no longer invest in Shell Canada; it
was once controlled here but is now 100% owned by a foreign company and
thus not separately listed on our exchange.
;Xm`[N% 8e[\ijfe How would you suggest Canadian control be retained?
I`Z_Xi[?XjbXpe\ The banks have a model that works for this country:
no one can own more than 20% of a bank; it must have its headquarters in
Canada; and a majority of directors must be Canadian. If not for the
Canadian Bank Act, Manulife—arguably the best insurance company in
North America—wouldn’t be around!
I think other industries are as critical. We should have a similar model
for resource companies. Once public, there should be a restriction on
resource companies as we see in some instances already: there was a 20%
ownership limit on PetroCanada that has carried over to Suncor.
;Xm`[N% 8e[\ijfe Some would argue that the openness of our capital
markets to foreign investment is a great strength—and see your position
as Canadian protectionism. Given your argument, why hasn’t it
resonated more fully?
I`Z_Xi[?XjbXpe\ I used the Bank Act as an example in arguing my posi-
tion, but I concede I haven’t been successful in convincing too many others.
It’s hard to define where such a resolution should apply. The recent study on
Canadian innovation by [Red] Wilson pointed out that losing head offices is a
big deal. We haven’t gone too far down the path to recover. Certainly we don’t
want to discourage foreign investment in energy and mining projects. How-
ever, there are big pools of capital now in Canada searching the world for
investments in these fields, and by virtue of foreign takeovers of these, they
don’t have a chance to invest in these Canadian companies. I maintain we
can still allow big investment from outsiders and retain control if we apply
provisions similar to the Bank Act to large energy and mining companies. This
would permit significant investment and the continuance of Canadian leader-
ship in these industries.
;Xm`[N% 8e[\ijfe Are boards diverse enough today?
I`Z_Xi[?XjbXpe\ I don’t think the lack of diversity is as much of an issue
today. There has been a deliberate attempt in diversified companies to get
people with a wide range of expertise. For example, at Nova we had chemical
business (relatively volatile) and pipeline business (relatively stable). These
were very different businesses and thus we needed differently skilled directors.
;Xm`[N% 8e[\ijfe What kind of diversity adds value to a board’s
deliberations?
I`Z_Xi[?XjbXpe\ A range of business experience in different contexts
adds the most value. If you’re doing business in Asia, you need the input
of Asians to understand the local context.
As chair,I never left a board meeting
on major decisions without knowing
what every director thought. I
didn’t want anyone to say later, out
of the blue, that they didn’t agree
;Xm`[N% 8e[\ijfe Is gender an important factor in diversity? If so, why
are women such a small percentage of directors in Canada?
I`Z_Xi[?XjbXpe\ Gender diversity warrants attention. We do need to have
more women on boards, as it does bring a different perspective. In banks, for
example, 70% of employees are women, so having women on the board to
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The Director’s Chair
reflect their interests is relevant. Gender representation is improving, but not
quickly for the same reason as why we’re not seeing more female CEOs in a
hurry: demographics. There’s an historical reality of gender roles that takes
time to move through the system. I see this resolving itself in time and see
it happening now. At TransCanada we have women like Sarah Reiss at the
executive VP level assuming ever greater positions of leadership.
;Xm`[N% 8e[\ijfe Should any legislative action be taken to get more
women on boards, as they’ve done in Norway?
I`Z_Xi[?XjbXpe\ I don’t think so. I believe most women would agree.
;Xm`[N% 8e[\ijfe With different views represented around the table,
it’s generally harder to reach agreement. As a board chair, how have you
managed this dynamic to reach the potential diversity promises?
I`Z_Xi[?XjbXpe\ As chair, I never left a board meeting on major decisions
without knowing what every director thought. I made sure all the different
perspectives were heard because I didn’t want anyone to say later, out of the
blue, that they didn’t agree. As the chair you have an obligation to explain pros
and cons of a decision. As a director, if you have a different perspective you
need to speak up. It takes a strong chair to listen and get to resolution with-
out descending into divisiveness. While I encourage director viewpoints,
directors must realize it’s not their role to be a constituency representative.
I like to put the options before the board in the context of what’s best for the
overall organization and then make a decision.
The banks have a model for retaining
control in Canada: no one can own
more than 20%, they must have their
headquarters in Canada and a majority
of Canadian directors. We need a
similar model for resource firms
;Xm`[N% 8e[\ijfe How do you get the best from directors when dis-
agreement is evident—and shepherd the board to a good decision?
I`Z_Xi[?XjbXpe\ The chair has to change style to suit the need; boards
have different cultures due to the business and makeup of the board itself.
In each case, though, the chair has to ensure directors have good information
and assume they’ve read and understood it. If I find a director isn’t prepared,
I make it clear they haven’t done so, and don’t waste time chasing
ignorance. Then directors know who’s better informed and those views carry
more weight. Once I get the informed views on the table, I seek a majority
view and bring the board to a judgement. You can’t spend forever making
a decision.
In the decision-making process, I try not to have a biased view. It’s not up
to me to direct the board to a decision I want. This would make other directors
back off. I expect the CEO to have a position, but as chair, I have to ensure we
have a full discussion. When I was a CEO, I welcomed a full board discussion
that made me discuss the pros and cons. I would rather screw up in front of
my board than in front of the world. Certainly, an effective independent
chair is of great value to the CEO.
David W. Anderson, MBA, PhD, ICD.D is president of The
Anderson Governance Group in Toronto, an independent
advisory firm dedicated to assisting boards and management
teams enhance leadership performance. He advises directors,
executives, investors and regulators based on his international
research and practice. E-mail: david.anderson@taggra.com.
Web: www.taggra.com.
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