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Updated Wednesday, March 3, 2010 9:28 am TWN, The China Post news staff

It's time to bring responsibility back into the boardroom

In some ancient warrior cultures, when a battlefield commander lost a skirmish, he also lost his head. Even more recently, a maritime tradition has held that the captain goes down with the ship when it is sinking. In today's modern business culture however, should a CEO destroy a multibillion-dollar company, it doesn't necessarily mean the end of that person's career. Today, especially in the world of high finance, failure — even significant failure — is often looked upon as a “lesson.” This is rarely the case in other fields. If say, a bus driver were responsible for just one significant accident, their license would likely be permanently suspended. A fund manager on the other hand is free to go right back to losing other people's money even if they've been involved in serious financial implosions.

For these reasons and more, it's easy to understand why many ordinary people feel so much anger at so-called “fat cats.” For roughly a year now, U.S. President Barack Obama has railed against a Wall Street business culture that sometimes seems to place more emphasis on “talented” individuals than on what these so-called talented people have achieved. When the argument is made that salaries and bonuses should be curtailed, CEOs often claim that without these bonuses they would not be able to retain “top” people. Recent financial meltdowns at some of the biggest companies in America might indicate however that talent is overrated.

Warren Buffett is known as the “Sage of Omaha” due to the steady leadership and wise decision-making he has demonstrated in controlling his conglomerate holding company Berkshire Hathaway. Since Buffett took over the company in 1965 he has received an annual salary of US$100,000 — among the lowest salaries for any CEO position in America. The 79-year-old Buffett has little tolerance for the current “fat cat” culture of Wall Street. In his annual letter to shareholders released last Saturday, Buffett argues that there is an easier way than government caps on bonuses and other legal measures to make CEO's take their position as the guardians of other people's money seriously. Buffett suggests that the bank accounts of bankers should be on the frontlines as well and that a CEO's personal wealth should be in line with the fortunes of the company. “It is the behavior of these CEOs and directors that needs to be changed,” Buffett writes. “They have long benefited from oversized financial carrots; some meaningful sticks now need to be employed as well.”

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