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.
EUROPEAN TARGETS: The planned Munich center would support TSMC’s European customers to design high-performance, energy-efficient chips, an executive said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers,
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations
GAINING STEAM: The scheme initially failed to gather much attention, with only 188 cards issued in its first year, but gained popularity amid the COVID-19 pandemic Applications for the Employment Gold Card have increased in the past few years, with the card having been issued to a total of 13,191 people from 101 countries since its introduction in 2018, the National Development Council (NDC) said yesterday. Those who have received the card have included celebrities, such as former NBA star Dwight Howard and Australian-South Korean cheerleader Dahye Lee, the NDC said. The four-in-one Employment Gold Card combines a work permit, resident visa, Alien Resident Certificate (ARC) and re-entry permit. It was first introduced in February 2018 through the Act Governing Recruitment and Employment of Foreign Professionals (外國專業人才延攬及雇用法),
‘A SURVIVAL QUESTION’: US officials have been urging the opposition KMT and TPP not to block defense spending, especially the special defense budget, an official said The US plans to ramp up weapons sales to Taiwan to a level exceeding US President Donald Trump’s first term as part of an effort to deter China as it intensifies military pressure on the nation, two US officials said on condition of anonymity. If US arms sales do accelerate, it could ease worries about the extent of Trump’s commitment to Taiwan. It would also add new friction to the tense US-China relationship. The officials said they expect US approvals for weapons sales to Taiwan over the next four years to surpass those in Trump’s first term, with one of them saying
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