Gustavo Ballvé on March 24th, 2010
Corporate Governance, Food for thought, Home, Signal or Noise

A Moody’s study shows that bank Boards have seen some shuffling and that more “financial expertise” was added. The FT argues (LEX column, subscription required) that some banks with the “worst” boards in terms of financial experience actually did pretty well, and notes other apparently strange occurrences – for instance, Goldman Sachs has a CEO who’s also chairman and yet the bank has done pretty well in the crisis…

We’ll never get tired of saying this: dump the checklist approach to CG. Actually, dump the checklist approach to anything.

Corporate Governance and alignment of interests is about so much more than the proportion of “independent” directors or separate CEO and Chairman roles and so on… It’s like saying that Berkshire’s governance lacks substance because “Buffett is both Chairman and CEO and keeps family and friends in the Board” without digging deeper – and by the way, many people do say this. The fact that Buffett only takes home US$ 100,000 in annual salary with no stock options and has about 99.7% of his net worth tied to Berkshire stock (all of which he purchased directly in the market) goes unnoticed. The percentage of stock owned by WB, Charlie Munger and Buffett relatives amounts to so much of the company that it’s like having a saber-tooth tiger as a watchdog for minority shareholders.

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