The public often views Buffett as pro-shareholder and a fan of good corporate governance. But Janjigian points out that Berkshire falls short on several fronts when it comes to corporate governance.
For example, governance experts suggest that a company's CEO and Chairman position should be occupied by different individuals, but this is not the case at Berkshire where Buffett holds both roles.
Berkshire (until recently) also didn't meet governance standards when it came to the number of independent directors on its board. As recently as 2002, the board of Berkshire consisted of only 7 individuals. There were three Buffetts on this board, along with Charles Munger and Richard Olson (a partner at Munger, Tolles & Olson LLP). Therefore, clearly 5 of the 7 board members were not independent.
In fairness to Buffett, however, he disagrees with the definition of "independent" when it comes to directors. Buffett believes that while those whose association with the company results in their receiving a large portion of their income from fees for being directors are regarded as independent by the experts, they are actually the least useful. Instead, Buffett would rather have directors with a substantial investment in the company, since these individuals are most likely to be on the side of shareholders when it comes to company matters.
Buffett has also failed in his succession planning according to Janjigian. For most of Berkshire's existence under Buffett, it has not had a plan in place. It should be noted that currently Berkshire does have clear succession planning, but it took an NYSE requirement to get this process started. Even so, no one person will do Buffett's job, as his job will be split between someone who runs the business, and someone who runs the investment operation. As such, in all of Buffett's years at the top of Berkshire, he has not trained anyone who can truly take over his position.