Carol McNamara, vice president, associate general counsel and secretary, Royal Bank of Canada says that the company has developed effective board materials policy.
Carol McNamara, pictured left, is vice president, associate general counsel and secretary of Royal Bank of Canada (RBC). She is accountable to RBC’s board of directors for leading the development, implementation and continuous improvement of effective corporate governance policies and processes at the bank.
She oversees retail shareholder relations and manages RBC’s corporate secretariat, including the global subsidiary governance office and the global corporate services legal team. She joined RBC in 1989 in Montreal as counsel supporting the organization’s retail and commercial banking businesses in Canada, and assumed her current role in 2008.
RBC has long been a governance leader in Canada. What is the bank’s philosophy with respect to governance?
I would say our key philosophy is continuous improvement. We are always looking for ways to serve the interests of shareholders better through our corporate governance practices. We watch emerging trends and regulations in the UK and Europe and have been paying special attention to the themes being brought forward by the investor markets following the recent financial crisis.
What are the key drivers of RBC’s commitment to good governance?
The first fundamental is the idea of independence well beyond the formulaic standards set by regulations. It is a true independence from management and a willingness to challenge management and hold them accountable.
Second is ethics and integrity. It’s not that we’re unique here – lots of organizations do a great job with this – but we’ve really made it part of the fabric of the board. The board, in turn, has done a great job setting the tone at the top and instilling a sense of accountability within management.
There are lots of different mechanisms in place. For example, if it’s a matter of reporting significant risks that arise between meetings of the board, there’s an expectation on senior management to report as and when these risks are uncovered. The board takes its role in the ethics and integrity of the company very seriously, and it makes a difference – that sense of accountability and knowing you will be scrutinized by the board means more thorough, thoughtful preparation by management in making business decisions and bringing forward proposals to the board.
Another key driver is that our board has a strong sense of serving as an effective steward of the interests of shareholders, clients and employees – all of our key stakeholders – over the longer term. Part of that fundamental effectiveness is how the board assesses itself, its committees and the individual directors. The directors see a lot of value coming out of board evaluations, beyond just going through the process. Their ultimate goal is to have the right boardroom culture and behaviors, the right skills and the right information so that they can come together to focus on strategy and constructively make decisions.
What do you find the most challenging aspect of governance in our current environment?
One of the biggest challenges is managing information to the board. With many lines of business and complex operations with multiple layers of regulation, including much more scrutiny of boards, there is a huge volume of information that the board is expected to review and understand.
There is a need to make sure we are providing the right level of granularity to the board. The board needs management to synthesize information and to understand the board’s priorities, so that the information provided strikes that right balance.
Nowadays there is the additional complexity of providing information electronically when the technology is changing rapidly. There are concerns about confidentiality and security, and an ever-increasing demand for information to be instantly accessible.
How are you dealing with the challenge of managing information at the bank?
One of the things we have done is to develop a board materials policy setting out requirements for information to be provided to the board. For example, the policy requires that we get an exception from the board chair if information is going to be delivered later than normal.
We have to be pretty crisp on deadlines, volume and the succinctness of policy summaries. The policy allows internal management to be disciplined and to flow that down through the company, and some of the same material requirements are now being applied to our internal management committees to help them work better.
What is your favorite part of the job?
The fundamental answer is people – at all levels. The RBC board is a privilege to work with, and I am continually inspired by the talent, energy, capabilities and loyalty of my amazing team. I draw so much energy from interacting with our retail shareholders and engaging with representatives of the investor community on governance issues.
What does shareholder democracy mean to you?
For me, it’s about bringing the voice of the shareholder into the disclosure and development of corporate governance practices. I think it’s an important lens for the board to look through when it is considering its practices and making decisions around things like board succession and executive compensation.
Another area I’m fascinated by is proxy plumbing. It highlights the complexity of what should be a fairly straightforward process of voting your shares. With the coming proxy contest at Canadian Pacific Railway, there’s going to be a lot of focus on empty voting and over-voting in 2012.
What do you see as the most important issue in governance now and in the coming years?
When there’s so much new global regulation coming at us, it’s about how boards ensure they are spending enough time engaging on issues of business strategy and company performance. Boards have to be able to spend time in their orientations, in their continuing education and in their meetings to understand the company, its markets and its competitive drivers. Management plays a big role in protecting that critical time for the board, and the corporate secretary is a key driver of this.
Carol McNamara received her bachelor of arts in political science from the University of Toronto in 1981 and her LLB from Queen’s University in 1984. She is a fellow of the Institute of Chartered Secretaries and Administrators, and a member of the Institute of Corporate Directors and the National Association of Corporate Directors. The parents of four busy teenagers, she and her husband are active volunteers in their school and parish communities.
Favorite books: To Kill a Mockingbird, Cat’s Table by Michael Ondaatje, the Harry Potter series.
Quote: ‘There is really a single answer to all the questions about my hobbies, adventures and interests, and that’s family. It is part of the fabric of my being. Family time balances me and helps me keep things in perspective so I can do a great job as a corporate secretary.'
