by KRISTIAN GRAVENOR

Billionaire businessman Stephen Jarislowsky, whose rank on Forbes' list of the world's richest people - 514 - matches his area code, has rapidly assembled an impressive force in his crusade to stop greedy CEOs from raiding corporate coffers.

Two years ago, the 78-year-old, Berlin-born investment expert launched the Canadian Coalition for Good Governance in a quest to stop upper management abuse and greed. The coalition now includes some of the country's heaviest financial hitters, pension fund managers and mutual fund honchos that control a half-trillion in assets.

And yet Jarislowsky remains skeptical of his chances to curb the ugliness of executive behaviour that sees CEOs grab millions regardless of the financial fortunes of their company. "Progress is very slow. These guys are well entrenched," he says. "You have to get everybody together to stop them, but it's a long process."

Jarislowsky says that CEOs' cash grabs have become an "epidemic." "Those things are, as far as I'm concerned, totally immoral and for people to set that kind of example, I consider that shameful. But they consider it legal and therefore acceptable. You get yourself a board of directors, a bunch of dummies, and they vote you what you want. I read Conrad Black's wife was exercised 250,000 options. What did she ever do except write the odd article, for which she was overpaid?"

Black mark

Indeed, Jarislowsky, who once served on the board at Southam, tried to curb Black's ultimately self-destructive quest for big compensation. "We are friends but I never permitted that kind of nonsense when I was on the board. He never told me why he deserved that kind of money, and ended up putting it through another committee that was full of his buddies. They get $60,000 a year or so to be on the board and think it's prestigious because he introduces them to Lady Thatcher and Ronald Reagan.

"Black knows damn well what he's doing; he doesn't need to give me an explanation. He kicked me off the board."

The classic, current Canadian case of executive overcompensation - following the Nortel fiasco - is that of Air Canada, now operating under bankruptcy protection after losing $4-billion since 2001. The executives have asked workers to accept pay cuts while CEO Robert Milton proposed a deal in which he'd receive up to $30-million (with another $130-million going to other senior execs). "He's putting the company in bankruptcy and still gets millions," Jarislowsky says. "How does that make the workers feel when he asks them to take a pay cut? Maybe the workers have gotten too much money but somebody voted it to them and you can't take it back. It's a sign of bad management."

Jarislowsky says the CEO cash feast is common "and getting absolutely worse. Every time you open a proxy statement it looks the same," he says. "Why should a CEO earn 500 times as much as the average worker in his company? These things destroy teamwork. But most shareholders don't even read reports, they just close their eyes. They do nothing to object strenuously to this."

Keeping up with the bosses

The rule of diminishing marginal utility might suggest that the already-well-off wouldn't be as hungry for cash as those who actually need money to survive. But the rule doesn't apply to our "scorekeeping" CEOs. "You go to Palm Beach and see them sitting there; they're extremely intelligent, and they have no argument for getting that money except that they see other CEOs getting the money and figure they should too."

Jarislowsky made his fortune through his buy-and-hold investment firm and is returning some of it through philanthropic funds. He has limited success with persuading CEOs to be less greedy. "Some come around to a sensible point of view but then they see another guy get $15-million and then they want it too, and the boards don't listen until we get really tough and take action."

His solution involves "more white collar cops" and an end to stock options for CEOs, along with an increased shareholder vigilance. "I have no objection that an executive become rich in the process of building a successful company. I think a decent salary should be paid, with a bonus for good performance, but they shouldn't get a free ride."