Michelle Leder. Michelle is an expert in scouring SEC filings and is the author of Financial Fine Print: Uncovering a Company’s True Value. She recently sat down with Meb Faber – we also embedded some clips from her interview with Manual Of Ideas which were just posted this weekend – check it out below
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And you know I like to look at Director compensation. I think that when director kind I like to see the mix of director compensation how much cash versus how much of it is stop when you start to see director compensation and we’ve seen it at some companies this past spring when director compensation starts to creep up above 300 thousand four hundred thousand dollars I think that you need to ask yourself you know what’s really going on here especially if the majority of that is in cash. I mean and here’s where we kind of really you know where I kind of say you know where I kind of ask you to think about it if you have a part time job and we all work hard for our money if you have a part time job nobody has ever showed me that being a director is a full time job because almost every single director has another they’re either a director of several other companies or they have another full time job somewhere else. I mean there’s nobody I’ve seen that is just a director. I haven’t yet run across where someone is like a professional director at one company and that’s their fulltime job. I’m sure maybe it exists out there but I’ve yet to come across it.
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Links from the Episode:
- 0:50 – Welcome and introduction to Michelle, author of Financial Fine Print: Uncovering a Company’s True Value and Founder of footnoted*.
- 5:24 – Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports– Schilit & Perler
Read the full transcript here by Med Faber
More from Manual of Ideas below
But if you’re making 300 400 thousand dollars for a part time job how likely are you going to be to rock the boat to say I don’t agree with your accounting treatment I don’t agree with how aggressive you’re being on this particular transaction. I don’t agree with blah blah blah blah blah. Fill In The Blank. Or are you going to shut up and you’re going to say I’ve got a 400 thousand dollar part time job. You know and that’s a pretty good gig. And so I’m just going to go along to get along. I mean I think it’s just human nature basically that you’re just going to be I don’t want to say like stick your head in the sand. But to a certain extent you’re just not going to necessarily certainly rock the boat. And I think that you know you see example after example of that look at Chesapeake you know right now it’s in the news a lot. Right. Because of what’s going on. We’ve been writing about Chesapeake for years. We wrote about a couple of years ago when they disclosed the twelve point one million dollar map collection that they bought from their CEO from Aubrey McClendon and work thinking like a map collection for twelve point one million dollars. I mean you know how is how is it how the directors approve that. And so now you get the news over the past couple of weeks about the well Participation Program the directors first they said they knew about it. Now they say they don’t know about it and they know all the details. Well what’s the story there showing up at the meeting.
You know so I think that that’s you know I don’t mean to drone on about that but I really feel like director compensation is a key component of proxy because when you have someone who’s making a significant amount of money and this proxy season we’ve seen some directors who are making I mean the highest one I’ve seen so far is one point six million dollars. Now if you’re making one point six million dollars and you have four meetings a year to show up for. And you know presumably some other business that you need to tend to book for meetings a year. Are you going to be the one raising your hand and saying you know things are really bad at this company you guys are really screwing things up or are you just going to sit there and be like.