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Nasdaq vs. Warren Buffett

The famous investor on what he looks for in a corporate director.
WSJ Opinion: Hits and Misses of the Week
WSJ Opinion: Hits and Misses of the Week
WSJ Opinion: Hits and Misses of the Week
Journal Editorial Report: The week's best and worst from Kim Strassel, Jason Riley, Mary O'Grady and Dan Henninger. Images: Zuma Press Composite: Mark Kelly

How is a company supposed to find out if a board candidate is gay if that isn’t already known? Is it supposed to hire private detectives to look into it? Once that person joins the board, does the company then have to broadcast his or her sexual orientation in the annual report so progressives can be satisfied that the quota is met? We could go on.

For a dose of sanity, we thought readers might enjoy Warren Buffett’s views on what he looks for in a director. The following is from the legendary investor’s 2006 letter to shareholders in Berkshire Hathaway ’s annual report:

“In selecting a new director, we were guided by our long-standing criteria, which are that board members be owner-oriented, business-savvy, interested and truly independent. . . .

“Charlie [Munger, Berkshire vice chairman] and I believe our four criteria are essential if directors are to do their job—which, by law, is to faithfully represent owners. Yet these criteria are usually ignored. Instead, consultants and CEOs seeking board candidates will often say, ‘We’re looking for a woman,’ or ‘a Hispanic,’ or ‘someone from abroad,’ or what have you. It sometimes sounds as if the mission is to stock Noah’s ark. Over the years I’ve been queried many times about potential directors and have yet to hear anyone ask, ‘Does he think like an intelligent owner?’


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