Part 7/8:
Munger noted that many compensation committees lack the incentive to prioritize the interests of the shareholders, often operating in an environment where expenditures appear trivial to decision-makers, igniting a sense of absurdity in the negotiation processes.
Conclusion: A Call for Change and Awareness
The conversation concluded with a call for heightened awareness of effective compensation structures and the true value of options. Buffett and Munger posited that understanding the nuances of financial instruments, such as options, and maintaining a performance-driven culture in corporate environments can lead to significant improvements.