Warren Buffett Refuses The Diversity Kool-Ade

Warren Buffett is not one of my favorite people, mainly because of his love of higher taxes. Nonetheless, this is refreshing (emboldening mine):

“We are not going to tie up resources doing things just because it is the standard procedure in corporate America,” Mr. Buffett said.

Mr. Munger added: “When it comes to so-called best corporate practices, I think the people that talk about them don’t really know what the best practices are. They determine that on what will sell, not what will work.” He added: “I like our way of doing things better than theirs and I hope to God we never follow their best practices.”

In its filings with the Securities and Exchange Commission, Berkshire explicitly states that it does not consider diversity when hiring board members: “Berkshire does not have a policy regarding the consideration of diversity in identifying nominees for director. In identifying director nominees, the Governance Committee does not seek diversity, however defined. Instead, as previously discussed, the Governance Committee looks for individuals who have very high integrity, business-savvy, an owner-oriented attitude and a deep genuine interest in the company.”

Mr. Buffett made a persuasive argument that the obsession among corporate governance experts with appointing so-called independent directors to company boards was one of the great hoaxes perpetrated on public investors.

“The independent directors in many cases are the least independent,” Mr. Buffett said. He explained that many independent directors need the money that comes with being a director, usually an annual fee of about $250,000. “They aren’t going to upset the apple cart,” he said, explaining that these independent directors get put on the compensation committee because they can be controlled.

“How in the world is that independent?” Mr. Buffett exclaimed. “You don’t get invited to be on your boards if you belch too often at the dinner table.”

This obvious point needs to be made again and again, apparently: Silicon Valley, which is rife with this kind of garbage thinking, is also increasingly a political and corporate echo chamber.