Billionaire investor Warren Buffett said shareholders such as mutual fund managers must stop supporting bad chief executives out of fear they'll find the spotlight turned on their own pay and performance.
"Getting rid of mediocre CEOs and eliminating overreaching by the able ones requires action by owners -- big owners," Buffett wrote in his annual letter to shareholders of Berkshire Hathaway Inc, his investment company. "Unfortunately, certain major investing institutions have `glass house' problems in arguing for better governance elsewhere."
Buffett's views on the obligations of corporate directors gained prominence last year after accounting scandals at WorldCom Inc and Enron Corp, the two biggest bankruptcies in history, shook investors' confidence in financial reporting. Regulators and corporate executives turned to Buffett, 72, the largest shareholder of companies including Coca-Cola Co and American Express Co, for advice on issues such as accounting for employee stock options as an operating expense and dealing with auditors.
The "acid test" for corporate reform is executive pay, said Buffett, who reported Berkshire's fourth-quarter net income soared 12-fold to US$1.18 billion as the company's insurance businesses raised prices and wrote more policies. Buffett was paid US$356,400 in 2001, the most recent year reported. That includes US$100,000 in salary, and US$256,400 in other compensation. Berkshire shares owned by Buffett and his wife Susan are worth about US$33 billion.
"Managers will cheerfully agree to board `diversity,' attest to SEC filings and adopt meaningless proposals relating to process," Buffett wrote. "What many will fight, however, is a hard look at their own pay and perks."
Too many CEOs are "otherwise decent people" who have "behaved badly at the office" in recent years, Buffett wrote.
They "simply followed the career path of Mae West: `I was Snow White, but I drifted.'"
The bull market of the 1990s encouraged abuses by executives, Buffett wrote.
"As stock prices went up, the behavioral norms of managers went down. By the late 1990s, as a result, CEOs who traveled the high road did not encounter heavy traffic."
Buffett said to be wary of companies that don't count stock options as an expense or have "fanciful" pensions assumptions.
The Ministry of the Interior (MOI) is to tighten rules for candidates running for public office, requiring them to declare that they do not hold a Chinese household registration or passport, and that they possess no other foreign citizenship. The requirement was set out in a draft amendment to the Enforcement Rules of the Public Officials Election and Recall Act (公職人員選舉罷免法 ) released by the ministry on Thursday. Under the proposal, candidates would need to make the declaration when submitting their registration forms, which would be published in the official election bulletin. The move follows the removal of several elected officials who were
The Republic of China (ROC) is celebrating its 114th Double Ten National Day today, featuring military parades and a variety of performances and speeches in front of the Presidential Office in Taipei. The Taiwan Taiko Association opened the celebrations with a 100-drummer performance, including young percussionists. As per tradition, an air force Mirage 2000 fighter jet flew over the Presidential Office as a part of the performance. The Honor Guards of the ROC and its marching band also heralded in a military parade. Students from Taichung's Shin Min High School then followed with a colorful performance using floral imagery to represent Taiwan's alternate name
FOUR DESIGNATED AREAS: Notices were issued for live-fire exercises in waters south and northwest of Penghu, northeast of Keelung and west of Kaohsiung, they said The military is planning three major annual exercises across the army, navy and air force this month, with the navy’s “Hai Chiang” (海強, “Sea Strong”) drills running from today through Thursday, the Ministry of National Defense said yesterday. The Hai Chiang exercise, which is to take place in waters surrounding Taiwan, would feature P-3C Orion maritime patrol aircraft and S-70C anti-submarine helicopters, the ministry said, adding that the drills aim to bolster the nation’s offshore defensive capabilities. China has intensified military and psychological pressure against Taiwan, repeatedly sending warplanes and vessels into areas near the nation’s air defense identification zone and across
A Chinese takeover of Taiwan would severely threaten the national security of the US, Japan, the Philippines and other nations, while global economic losses could reach US$10 trillion, National Security Council Deputy Secretary-General Lin Fei-fan (林飛帆) wrote in an article published yesterday in Foreign Affairs. “The future of Taiwan is not merely a regional concern; it is a test of whether the international order can withstand the pressure of authoritarian expansionism,” Lin wrote in the article titled “Taiwan’s Plan for Peace Through Strength — How Investments in Resilience Can Deter Beijing.” Chinese President Xi Jinping’s (習近平) intent to take Taiwan by force
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