An expert in corporate governance says the cancelled prescription coverage deal between Manulife and Loblaw is a “teachable moment” when it comes to communication between the between the C suite and the corporate board.

Last month, Manulife announced that Loblaw-owned pharmacies and Shoppers Drug Mart would “primarily” be the ones serving its prescription specialty drug programs. It later backed off the plan following criticism from the public and government.

Richard Leblanc, professor of governance, law and ethics at York University, said the developments likely represent a situation where management was making decisions without discussing them with the board.

“This was, in my view, a teachable moment that if in doubt, go to the board and just get a workout by a second set of eyes,” he told BNN Bloomberg in a television interview.

“Likely if it had gone to the board, management would have been instructed to stand down or to withdraw.”

As grocery stores face pressure around competition, Leblanc said big external partnerships should have people at the very top of a company examining them. 

“We have a minister that is breathing down the neck of grocery companies and you do not want to make sudden moves without going to the board and getting cross examined,” he said.

“Likely if it had gone to the board or did go to the board, you'd have individual directors saying: ‘Well, hang on a second here, the minister wants more competition. Isn't this the complete opposite of what the minister wants?’”

Prior to the pandemic, Leblanc said management could conduct minor transactions without board awareness, but now it’s best practice to include the board in all minor deals, even if there are no financial stakes.

“The board gets a kick at the can when it comes to transactions or actions or strategies by management that have the potential for stakeholder consultation, stakeholder engagement,” he said.

“The board wants to see that the Ts are crossed and the Is are dotted.”

With files from The Canadian Press