Integrity made simple

Buffett famously shared with the employees of the Salomon Brothers a relevant piece of advice in 1991: “lose money for the company, and I will understand. Lose a bit of reputation for the company, and I will be ruthless.”

He also implied the following as a guide of behavior: if you wouldn’t have any problem to have your actions described in detail on the front page of any local newspaper, where your friends and family can easily read it, then go ahead and do it.

Fund boards are lap dogs

This was Buffett’s main conclusion after the famous 2002 letter to shareholders. Even if they had an explicit role as guardians for fund shareholders, fund directors will rarely push back against other fund managers.

Buffett highly criticized corporate boards for pretty much the same reason, as they have an entire culture of rubber-stamping what compensation consultants will put in from of them. He was also very critical of his own job as a board member.

The bottom line is that you should look for board members that have business experience and a lot of meaningful ownership in the company they’re currently overseeing. And even then, you should expect too much.