Does the trend towards majority voting help corporate governance?
Munger: I don’t think it will improve ethics. There are fashions in corporate governance that come and go and majority voting as a current fashion. Most boards are a mixed lot and then you implement new govenance rules, you need to give careful consideration to who is going to be most active in using/potentially abusing them. Buffett: the quality of a company’s governance is determined by whether board members actually think like owners and whether they have business saavy. These are the factors that really matter – switching to majority voting doesn’t have a major impact. Boards that are effective have people in the board room who are busnes saavy, and this is not something you can mandate with a rule chance. The main function of the board is to hire the right CEO and to prevenet them from overreaching and also to exercise independent judgment on important acquisitions because many CEOs are more than rationally motivated to do deals. Only antidote for bad governance is to have the lar
