February 1, 2022
While the intent of this proposal is noble, as an individual investor I believe it is misguided. Warren Buffett will tell you that incentives matter. Incentives drive behavior. If all corporate management is incentived to focus on one primary metric, the outcome will be a system that games the metric at the expense of real business progress. As an experiment, consider some of the greatest businesses of our generation - Costco, Walmart, Amazon, Apple. If their management was forced to optimize between some arbitrary metric set on from above, or a fundamental driver of real business value, management focus will be taken away from the actual business. Or worse, this excellent management will leave or be removed. For most others, the incentive to maximize compensation and game the system will become too strong. I strongly urge you not to proceed with this rule. Capitalism is a great allocator of resources, the best management with the best incentives will win over time and provide the highest benefits to society. No need to unnecessarily disturb them.