Over the weekend Warren Buffett stated that poor leadership is the greatest risk facing companies. Mr. Buffett is preaching to the choir and knows a thing or two about bad leadership having lived through scandal and CEO turnover at Wells Fargo while Berkshire was a large holder. Coca Cola – another Berkshire holding – hasn’t exactly lit the world on fire in decades. To quote Mr. Buffett: “You get a guy or a woman in charge of it—they’re personable, the directors like ’em—they don’t know what they’re doing. But they know how to put on an appearance. That’s the biggest single danger.” We refer to this type of CEO as a “Non-Operator”. Non-Operators are easy to ferret out. A single phone call with company management and a few specific questions will provide investors with more than a general idea as to how a CEO leads (or administers) his/her company. Does the CEO value product innovation? Has the CEO created an “innovation culture”? How is variable compensation used to incentivize outcomes across the organization? These questions and many more can be answered by leveraging our CEO Due Diligence service for institutional investors. Contact us at email@example.com to learn more.
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