Warren Buffett issued his annual letter to shareholders two weeks ago. These letters are always a great read, and this is one is no exception. Here, he comments on corporate governance and the credit crisis:
It has not been shareholders who have botched the operations of some of our country’s largest financial institutions. Yet they have borne the burden, with 90% or more of the value of their holdings wiped out in most cases of failure. Collectively, they have lost more than $500 billion in just the four largest financial fiascos of the last two years. To say these owners have been “bailed-out” is to make a mockery of the term.
The CEOs and directors of the failed companies, however, have largely gone unscathed. Their fortunes may have been diminished by the disasters they oversaw, but they still live in grand style. It is the behavior of these CEOs and directors that needs to be changed: If their institutions and the country are harmed by their recklessness, they should pay a heavy price – one not reimbursable by the companies they’ve damaged nor by insurance. CEOs and, in many cases, directors have long benefitted from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well.
Hey Mr. Buffett! You are cordially invited to become an advocate on Moxy Vote, where you can help us rally the retail vote and help influence the CEOs and Directors with some “sticks”. If you’re interested, have your people contact our people.
Flickr photo by apfriedman. Here’s another good one.
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