Proxy Governance supports Warren Buffett's concerns that some institutional investors' corporate governance assessments focus on minutiae instead of important issues that affect shareholder value, according to a statement the firm issued today.
"We've seen a focus on things like staggered boards, poison pills and the detailed terms of stock option plans for all employees — issues whose effect on shareholder value is usually marginal, at best," Steven M.H. Wallman, Proxy Governance founder, said in the statement. "At the same time, we've seen no real focus on issues that absolutely affect shareholder value — like how the CEO is performing relative to peers and whether the executive's pay has been appropriate relative to performance and to peer companies.
"We believe this kind of misplaced focus has disserved the institutional investing community," the statement added.
Mr. Buffett yesterday criticized the rationale that institutions used in opposing his re-election as a director of Cola Coca Co., Atlanta, last year.
Proxy Governance is a proxy advisory firm that began issuing recommendations this year.