Governance at BDCMichel Bergeron, Vice-President - Corporate Relations
ADFIAP - October 2009
Governance at BDC
Governance at BDC
What is Corporate Governance? It refers to:
What are the structures, systems and practices for overseeing the direction and management of an organization, so that it carries out its mandate and objectives effectively.
Governance at BDC
Governance changes in Canada in last 15 years
Few Governance Committees
Executive Committees were the norm
CEO – had most of the power
No performance evaluation of the Board
Role of the Board was decorative
No independence
Focus of the Board now more on high level strategies
Governance at BDC
Governance at BDC (cont’d)
Canada’s approach to governance in Crown corporations:
Arm’s length = Autonomy
Counterbalanced by Accountability and Transparency
Need to have clearly defined roles and structures through a well defined legal framework
Governance at BDC
Governance at BDC (cont’d)
A fine balance between:Autonomy:
Non-partisan, non political provider of serviceIn charge of its operationsAble to resist inappropriate pressureHas a Board of Directors comprised of independent directorsClearly defined mandate – Sustainable financially
Accountability:ParliamentBoardMinisterManagement
Governance at BDC
Governance at BDC (cont’d)
Parliamentof Canada
Minister of Industry
BDC Board of Directors
BDCManagement
BDC Act Financial Administration Act
Access to Information
Governance at BDC
Governance at BDC (cont’d)
Parliament’s Oversight:Annual Report (every year):
-Public (AG)
Annual Audit – 2 Auditors
-Private
Corporate Plan (every year)
Special Exam (every 5 years)
Legislative Review (every 10 years)
Access to Information Act (ongoing)
Governance at BDC
Governance at BDC (cont’d)
What is the Board’s roleIs a steward to BDC
Ensures that BDC’s activities are aligned with its public policy mandate
Is responsible for:Approving BDC’s strategic direction and corporate plan, and monitoring progressEnsuring BDC is identifying and managing its risksEstablishing compensation policies, and reviewing and approving management’s succession planReviewing BDC’s internal controls and management information systems
Governance at BDC
Governance at BDC (cont’d)
What is the Board’s roleIs responsible for:
Overseeing communication and public disclosureSetting performance targets and monitoring progressOverseeing BDC’s pension plan, and establishing its fund policies and practicesEnsuring the highest standards of corporate governance
Governance at BDC
Governance at BDC (cont’d)
How does good governance happen? The Chairperson plays a leading role in leading in Governance by fostering certain behaviours:
IntegrityIndependence of Mind (for both directors and management)The right tone at the top (from the Chairperson and the CEO)Promoting transparency and discussion
Governance at BDC
Governance at BDC (cont’d)
The Chairperson ensures that:
The Board adopts a clear description of its roleThe right committees are created and they have clear responsibilities (Terms of Reference). BDC’s Board has five committees:
Human ResourcesAuditCredit/Investment & RiskGovernance/NominatingPension Funds Investment
Formal interface with Shareholder – Through the Minister
Governance at BDC
Governance at BDC (cont’d)
The Chairperson ensures that:
The Board, the Committees and the Directors evaluate their performance yearly
The Directors receive proper orientation and continuing education
Governance at BDC
Governance at BDC (cont’d)
Other areas where the Chairperson will impact Governance:
Effective recruitment of Directors with the right skills and competencies for the Board
Effective contribution stems from knowledgeable and well informed oversight
Governance at BDC
Composition of the board
Senior people with expertise in:credit (at a large financial institution)risk managementventure capitalinvestments (general)chief executive officer of a large enterpriseownership or leadership of an SMEfinancial literacy and expertise
Governance at BDC
Governance at BDC (cont’d)
Also means, the Board focuses on Corporate Strategies:Participates actively in the development and approval of the Corporate Plan:
Meets yearly in the fall, followed by many discussions and approval of the Corporate Plan in January
Reviews and approves strategic programs and policies including HR compensation policies, succession planning, performance evaluation of the CEO
Recommends candidates with the right set of skills and competencies for the Chairperson and CEO positions for appointment by Government
Governance at BDC
Governance at BDC (cont’d)
Workplace environment Conductive to Good Governance
Core ValuesEthicsClient connectionTeam spiritAccountabilityWork-life balance
Employee Code of Conduct, Ethics and ValuesBoard Code of ConductClear Policy on disclosure of wrongdoing: referred to Audit CommitteeReferral Policy
Governance at BDC
The board
Average year: 6 to 10 meetings
Fiscal 2009: 15 meetings.
For a summary of our important decisions, please see the annual report
1-888-INFO-BDC www.bdc.caBusiness Development Bank of Canada Head Office 5 Place Ville Marie, Suite 300, Montréal, Quebec H3B 5E7