The always fascinating Carl Icahn was at it again. In a CNBC interview with Scott Wapner, the scrappy activist hedge fund manager said part of the job of the activist was to hold CEOs accountable and “get them off the golf course.” Icahn quickly added “There are many fine CEOs” after the punch had already been thrown.
Icahn and Buffet Agree on derivatives risk
After opening the interview by agreeing with Buffett on the dangers of the big bank derivatives that underlie the financial system – a part of the interview cut off from the rebroadcast on CNBC.com – Icahn was then asked about Buffet’s critique of activist investing as too short term. (The issue regarding derivatives has been exclusively reported in ValueWalk here, here and here.)
Responding to Buffett’s short term critique, Icahn said he’s in it for the long term. “Get involved in corporate governance. Not micro manage… but look at the big picture,” he advised when addressing how the economy needs to get off the ground. “What can turn around this economy is not necessarily the Fed,” but rather getting involved in corporate governance. “Make CEOs accountable. Get them off the golf course if they are on the golf course too much.”
Icahn says activists do tremendous good
Moving to praise the activist investing approach, which has been accused of bullying corporate boards, Icahn put his role into perspective. “If we can do that, call them to the carpet like you would in a private business, you’re going to do tremendous good for your economy.”
Country clubs, fraternities and corporate boards
Comparing companies to fraternities, Icahn said “It’s amazing where we agree on one or two things.” One item Buffett and Icahn agree is in respects to the boards being a collegial or bestowing a certain social status on the member, lessoning the company’s overall effectiveness. Part of the goal of the activist is to address this problem by holding upper level management accountable to shareholders, an oath that Icahn embraces.
He then dives into Warren Buffett, returning the punch from Buffett earlier in the morning. Characterizing Buffett’s involvement in abstaining from the The Coca-Cola Company (NYSE:KO) board meeting, when he later said he disagreed with the board decision, was caving to the old boys clubby establishment. “You don’t want to disagree, you don’t want to say ‘no.’ That to me is completely wrong. That’s not what a democracy is about,” Icahn said.