Boards and Managers
The one thing about Buffett that never changes is his consistency in outlook. When it comes to his thoughts on boards and managers in the company his consistency comes through again.
He's mentioned that concerning CEO performance that many times it is held against vague standards. In other words: It's not predictable. Consistency in a company, along with the individuals within it, must be based upon measurable standards, or a key element of projecting can't be part of the company strategy. That's the major point he makes here.
Now when it comes to boards and directors, his thought is that there should not be any more than 10 or fewer, and of those, they should primarily be from outside the company.
The major point I want to make in this is that Buffett has his eyes fixated at predicatability and projectibility. If those two things can't be done reasonably, he hesitates to allow it to be part of the way of doing business in Berkshire (BRK-A).
This can be seen in the way he wants vagueness taken out of the picture with CEO performance, along with the majority of board members being from outside the company. It all relates back to his investing and managmenet philosophy, which when you really study them, are close to being the same.
The bottom line is the ability to project out 10 to 15 years with reasonable accuracy with any company he's in and anything that the company is involved in. That requires everything else across the Berkshire family to adjust to that reality. It's one of the key reasons why year after year the companies and management perform at predictable levels.
Other Buffett Resources:
Warren Buffett: The trouble with being a legend
Warren Buffett: 'I told you so'
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