With a simple lifestyle inside the US, a megain -plating has turned a textile company into one of the most valuable companies in the world. And even if it is not a big tech or state oil company, (that’s right – five million five hundred thousand percent!). As a result, it became one of the few really popular investors and even admired outside the financial market.
His investment philosophy annually attracts thousands of people to Omaha, at the event known as the “Woodstock for capitalists.” It was like this last weekend when Buffett, 94 ,. While the world discusses if its successors will maintain the level of management, less attention has been given to another fundamental legacy of Buffett: its contribution to corporate governance.
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A forceful example is in the letter to the 2002 shareholders, released still in the wake of the corporate scandals that marked the early 2000s, such as Enron and Worldcom cases. At the time, the “Oveha Oracle” appealed for a more responsible and transparent governance, emphasized the need for independent counselors, diligent audit committees and an executive remuneration in line with shareholders’ interests.
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But as early as 1993, Buffet warned of the counselors’ responsibility and criticized the omission of the boards in the face of corporate misconduct, such as mediocre managers and excessive remuneration. And that although many counselors are considered “independent”, few are aware of business or real commitment to shareholders. He even recognized his own failure at times when he prioritized collegiality rather than the defense of investors’ interests. For Buffett, the focus of the advice must be in the long run and the courage to confront excess management.
Over the years, the mega -coating has once again talked about excessive compensation and criticizing aggressive accounting practices to inflate profits or granting excessive action to executives, diluting the value of shareholders.
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One of the qualities that Buffett values most business leaders is integrity – one of the foundations of corporate governance. And their letters emphasize that large companies are conducted by honest and capable managers who place the interests of shareholders first. At his last shareholder meeting as CEO of Berkshire Hathaway, he reiterated that the investor confidence is fundamental and that business leaders – including counselors – must act with long term integrity and focus. This culture is reflected in Berkshire Hathaway itself.
With, the principles of decentralized management, long -term vision and financial discipline that marked the Buffett era must be preserved. Buffett will continue as chairman of the board, which will allow him to continue to guide the leadership and contribute at crucial times of capital allocation.
Now, under new command, the market and the press will further follow the company’s performance, aware of the continuity of one of the most successful managements of modern capitalism. And one thing is certain: Buffett would never have come so far if he had not placed governance first. This is a lesson that every investor, especially those who want even a fraction of what he has achieved, should take very seriously.
