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The Essays of Warren Buffet

Mindware

CHAPTER

The Power of the Simple Math

The power of the simple math is often ignored by companies to the detriment of their shareholders. Many corporate compensation plans were where managers handsomely for earnings increased as produced solely or enlarged by retained earnings, i.e. earnings withheld from owners. With such an option, your manager would reap a substantial profit at your expense, just from having held on to much of your earnings. The unwelling of managers to do unto outsiders, however, is not matched by an unwelled us to do unto themselves.

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