Sometimes management interests conflict with shareholder interests in subtle or easily disguised ways. Take corporate philanthropy, for example. At most major corporations, management allocates a portion of corporate profit to charitable concerns. The charities are chosen by management, for reasons often unrelated either to corporate interests or shareholder interests. Berkshire does things differently.
Shareholders designate charities to which the corporation donates.
Nearly all shareholders participate in allocating millions of dollars per year to charitable organizations of their choice. This is an imaginative practical response to a tension that is at the core of the management-shareholder relationship. It is surprising that other American corporations do not follow this model of corporate charitable giving. Part of the reason may be the lack of long-term ownership orientation that characterizes the shareholder profiles of many American corporations. If so, this demonstrates a cost of the short-term mentality of America's investment community.