C - Bill Nygren Market Commentary - Q2 2021

• In this commentary, I’ll cover Oakmark’s thoughts on governance in relation to our Funds’ selection of undervalued stocks. Governance is a back-burner issue for investors who trade their portfolios frequently.
• When you only hold a stock for a few months, it barely matters. But when your holding period is measured in years, like it is for Oakmark, governance can be the difference between success and failure.
• Oakmark opposes excessive executive compensation for mediocre results. However, we want salaries to be high enough to attract talented individuals and any additional compensation to be tied to exceptional performance that benefits all shareholders.
• When a company earns more than it can invest where it is competitively advantaged, we’d like the excess returned to shareholders. CEOs who are focused on ego gratification or on maximizing their personal income rarely want to give money back to the owners.

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