Gustavo Ballvé on January 11th, 2011
Corporate Governance, Food for thought, Home

First of all, credit where credit is due: the Farnam St. blog is a daily source of interesting stories, and therefore a new member of our Blogroll. They recently ran a link to an “all-too-common” story of the downfall of an unnamed Canadian company, and the difference is that this time an independent director has spoken up about the conflicts of interest that can mar a Board’s conduct. While the article runs a little too long, the focus on the often too-close personal ties between directors and management is key: it’s not as easy to pinpoint as a compensation number, or the percentage of so-called independent directors, or whatever item an analyst picks out from the Proxy statements (in fact, assuming that most investors actually read that is probably too optimistic). One must always have a demanding moral filter with all partners, and when investing for the long term this includes a company’s Board of Directors.

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