ISS recently warned investors to withhold votes from Warren Buffett as a director for Coca-Cola, citing independence issues. Although I understand the desire for independence, Independence is truly overrated. I say this because the less talked about need is the need for rightness, or ethics. However, because we can't talk of ethics anymore, because really frankly...Who are we to judge? We must instead exalt independence above all else. Edward C. Johnson III of Fidelity Investments lays this out well in a piece he wrote for the WSJ. Unfortunately, as right and wrong have been forgotten we exalt virtues like independence (although I do grant appearances can be important) above truly important virtues. After all, interested managers are likely to be the best, but they must first be ethical or else they will take advantages of others.
Update: I was hoping Professor Bainbridge would write about this, and lo and behold, he has. Although, I don't know his opinion on the "independence" issue, it's nice to see he thinks the idea that votes for Buffett should be withheld is insane. Importantly, the professor points out Buffett's integrity. My point mainly was and is, integrity is far more important than independence.
Posted by Joel at April 9, 2004 10:56 AM | TrackBack