The late Purdy Crawford on how corporate directors need to be more like catfish

Also: golfing for business is overrated

Former Imasco Ltd. CEO Purdy Crawford dressed in a blue suit.

Former Imasco CEO Purdy Crawford in 2003. (Chris Reardon)

From the Archives: Prominent Canadian lawyer and businessman Purdy Crawford died on Tuesday August 12. The former CEO of Montreal-based Imasco Ltd. was a long-time advocate of better corporate governance. In 2003 he gave this interview to Canadian Business on what he’d learned in the course of his career.

When people used to go fishing, they would put the fish in water in the hold of the boat. One of the difficulties was that the water would get warm and the fish would die before they got back into port. They discovered that catfish created electrical impulses that kept the other fish alive, so they put catfish in the holds. The moral of the story is, we need more catfish directors.

Directors should be quite active. I’m on the phone a lot with companies I’m on the board of. I’m not being difficult, but sometimes you go to a meeting and something dawns on you a day or two later, so I call up to chat about it. I don’t always wait for the next meeting if I think it’s important. Early on, the boards I was on were public boards of companies I was the lawyer for. That’s a no-no today, and properly so. Boards then, depending on the circumstances, were quite the creation of the CEO. You still get quite a bit of that in the US, but here that shouldn’t happen very much anymore. At least it doesn’t happen where I’m involved.

Over the last eight or nine years, boards have taken much more control of companies, and CEOs are much more beholden to boards. You need a director who is compatible with the CEO, but the selection should be through the nominating and governance committee. You wouldn’t want to select a director without the CEO meeting him or her.

Directors need an inquiring mind. They must be able to work hard and be prepared to put their cards on the table. It’s amazing: you can sit around a meeting and nobody speaks up, but if somebody does–boy, you find others waiting to speak as well. I’m a great believer in diversity of backgrounds. You need people who understand human resources, incentive and compensation systems, finance. Fundamentally every director should, over time, get a grip on financial matters. Everything ultimately comes down to what the results are, and it’s very helpful to have the big picture on that.

Experience is a wonderful thing. I’m all in favor of introducing new directors and director education, but it takes a long time to develop the experience. You might have thick books, but it’s not as daunting as it may seem if you have experience. I chair the five year review committee. We recommended that the Ontario Securities Commission be given the power to make governance rules, but we didn’t necessarily mean they should always exercise that power. It would be a question of pushing and pulling with the TSX. You have to recognize that there’s a conflict with the TSX, which is trying to make money and get listings.

When I joined Imasco, I thought I’d been around so I didn’t have a lot to learn. That was true of a lot of areas, but it wasn’t true of operations. It was an exciting learning curve to understand how Shoppers Drug Mart operates and start adding value. The same was true with Imperial Tobacco. I became a great believer in great operators. Business schools pay a lot of attention to strategy, but they don’t pay enough attention to execution.

I really admire the companies that can go from generation to generation and rejuvenate themselves. That was part of our mission at Imasco, but we didn’t always succeed.

I went in at Imasco to become the CEO. I wouldn’t have gone to become a lawyer. I might have done that today, by the way–the legal general counsel office reporting to the CEO has become much more significant. The remuneration is comparable to a fairly outstanding lawyer in a law firm. There are no pension plans with a law firm.

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There were no lawyers in my family, and we didn’t see much television to see Perry Mason. I just decided early on I wanted to be a lawyer.

Hal Mockridge, who was head of Oslers when I joined and a great lawyer, took an interest in me. He helped straighten out some of my use of English, which I got from growing up in rural Nova Scotia. For 10 years of my career, he was sort of a mentor.

I’m a cynic about business golf. I used to be involved with a company and the CEO would tell me, ‘Oh, I golfed twice with the head of Simpsons-Sears or whatever.’ And I would say ‘Look, do you think that’s a good thing? You’re so goddamn competitive you couldn’t play without him getting mad at you. I see so many people going to play golf and coming home frustrated, so I think the boom is starting to wear off. I can golf and enjoy it. There’s a little nine-hole course in Parrsboro, Nova Scotia. I like it because it’s easy. It makes me feel good.

I like to do my own investing, with what little money I have. As Warren Buffett says, an investor makes a better businessman.”