Dual role for the chairs of the boards of directors of Crown corporations
On June 8, the Progressive Conservative government named Bonnie Mitchelson chair of the Manitoba Liquor and Lotteries board and Edward Kennedy chair of the board of Manitoba Hydro. The role of the chairs of the boards of directors of Manitoba’s five major Crown corporations is not well defined in legislation, has not been extensively studied, and is not well understood by most members of the public.
The role of the president is shaped by both law and policy. This reflects the fact that state corporations are legally part of government, but are expected to have some independence from political involvement in their ongoing operations. This results in confusion and debate over whether the role of chairmen and the boards they lead is to promote the long-term interests of society or to support the short-term political interests of the party. in power.
Although the position of chair of the board of directors of a Crown corporation superficially resembles that of chairs of the board of directors of private corporations, there are several fundamental differences.
It starts with government control over the appointment, compensation and removal of presidents. It is a long-standing tradition in Manitoba that governments, regardless of party in power, appoint “political cronies” as chairs and members of Crown boards. Appointments are made through Cabinet decisions based on recommendations from the Prime Minister. In private companies, the board itself usually selects the chairman.
Although chairmen and board members sign multi-year contracts, they serve “at pleasure,” meaning they can be removed by governments at any time. When governments change, presidents and councils are usually replaced, meaning there is less continuity than in privy councils.
In 2017, all but one of Manitoba Hydro’s nine board members resigned in protest of then-Premier Brian Pallister’s refusal to meet with them to discuss the company’s future. , which was unprecedented in the history of Manitoba Crown corporations.
The remuneration of chairmen is set by the government and is modest compared to the sums paid to the heads of the boards of directors of large companies. This is partly because the job is not meant to be full-time, is meant to involve a component of the civil service, and is intended to prevent a public backlash against what might be considered a lucrative patronage appointment.
Mitchelson will receive $35,000 and Kennedy $50,000 a year, sums many will consider generous for a part-time job.
Under the Crown Corporations Governance and Accountability Act, the government has the power to direct boards of directors through mandate letters, which were made public under Pallister. If any letters were sent by Premier Heather Stefanson to the new appointees, they have not been made public.
The Act also allows governments to issue binding public policy directives to Crown boards. Rather than go public, governments have been known to rely on private pressure on presidents and, given their political backgrounds, presidents may feel pressured to persuade fellow councilors to follow informal government instructions, resulting in blurred accountability for the actions of Crown corporations.
The president is the main communication link with the government. Regular interaction aims to ensure that the board is aware of the government’s thinking on key issues and to ensure that there are no unpleasant surprises arising from the board’s decision-making that could embarrass the government.
The chair designs the board’s agenda, ensures that it focuses on strategic decisions (not narrow operational issues), organizes effective meetings, encourages the participation of all directors, and seeks ways to improve board decision-making.
There are clear ideological differences between the two main parties regarding the appropriate role of prosecutors. For example, under the Pallister government’s fiscal restraint policy, Crown corporations have been forced to reduce their management ranks by 15%, reflecting the view that Crown corporations often seek expanded. In contrast, New Democrat governments have used wreaths to promote broad economic and social policy goals.
Mitchelson is a former Conservative MP and cabinet minister who will identify strongly with the government’s agenda. Kennedy is the former CEO of the Northwest Company who describes himself as a “neutral outsider” who would work to balance the differing perspectives on the future of Hydro.
It will be interesting to observe how each balances the legal role of fiduciary to the long-term interests of society with the political role of responding to politics and other short-term concerns of government.
Paul G. Thomas is Emeritus Professor of Political Studies at the University of Manitoba. He has served as Chairman of the Board of a Crown Corporation and of several independent advisory boards to government.