Sell the Stock!
Charlie Munger’s final request wasn’t about family or legacy. In fact, it was so outrageous Warren Buffett replied: “Shoot me first.” Here’s the true story (a masterclass in maximizing shareholder value, long-term) ↓
We have all watched countless executives cave when Wall Street demands lower wages and cut benefits. Costco’s founder faced this exact pressure.
A Deutsche Bank analyst once pointed out that “at Costco, it’s better to be an employee or a customer than a shareholder.”
The implication was damning: the company cared more about workers than investors.
Founder Jim Sinegal heard the criticism.
His response? Three words:
“Sell the stock.”
That’s it. No apology. No compromise. No adjustment to “balance stakeholder interests.”
Why? Because valuing employees is much more than a mere policy in Costco’s handbook. It’s a core value Sinegal will die on a hill for.
But here’s what that Deutsche Bank analyst got completely wrong (as validated by the stock performance over the last 30 years):
This ruthless commitment to principles isn’t bad for shareholders. It’s the best thing that could happen to them.
Enter Charlie Munger.
The legendary investor — Warren Buffett’s business partner for 60+ years — couldn’t disagree more with the Deutsche Bank analyst. Costco was Charlie’s absolute favorite stock.
In fact, when Warren and Charlie were once asked what they would want as their last wish if they were on a plane being hijacked, here’s what they said:
The hijackers offered each one final request before they were executed.
They turned to Charlie first.
Charlie said: “I would like to give once more my speech on the virtues of Costco… with illustrations.”
The hijacker found this so reasonable he granted it.
Then the hijacker turned to Warren: “And what would you like, Mr. Buffett?”
Warren said: “Shoot me first.”
This joke – told by Buffett – perfectly captures the depth of Charlie’s obsession. But it also reveals something profound: the man who understood investing and long-term value creation better than most, chose to stake his reputation and fortune on Costco’s model:
A model that prioritizes employees over quarterly earnings.
A model that ruthlessly puts the company’s core principles first.
The reason Charlie wasn’t delusional is simple: he was thinking in decades while that Deutsche Bank analyst was thinking in quarters.
Costco created a “Code of Ethics” that ranked priorities explicitly:
1. Obey the law
2. Take care of customers
3. Take care of employees
4. Respect suppliers
5. Reward shareholders
Sinegal refused Wall Street’s relentless pressure to cut wages, reduce benefits, or lower employee quality of life to boost quarterly earnings.
During the 2008 financial crisis, when executives discovered nine Costco employees had lost their homes to foreclosure, Sinegal’s response wasn’t to reduce wages to protect profits. Instead, the company maintained its culture of integrity. They treated employees with the same standards they treated customers and suppliers.
Munger once said (about Cosco): “It has a frantic desire to serve customers a little better every year. When other companies find ways to save money, they turn it into profit. Sinegal passes it on to customers. It’s almost a religious duty. He’s sacrificing short-term profits for long-term success.”
The results speak for themselves…
Costco maintained industry-leading employee retention rates. Their employees earned substantially more than retail competitors.
Yet the company’s stock significantly outperformed the broader market over decades — proving that employee-centric values aren’t a cost to profit, they’re the very engine that powers profit.
Sinegal said it simply: “It’s easy. We all know what the right thing to do is.”
When you actually do the right thing — and hold firm through the pressure — your organization becomes something your competitors can never replicate.
The competitors obsessing over margin expansion (easily copied) never had the moat that Costco built.
The competitors squeezing employees and customers never create the loyalty that generates predictable, rising profits for decades.
Don’t be tempted to think this only applies to Fortune 500 companies.
Whether public or private these are irrefutable truths / infallible virtues.
The test for your organization — for each “core value,” ask yourself:
• Would we lose money to protect this value?
• Would we refuse shareholder/customer pressure to compromise it?
• Would we pass on revenue opportunities that violated it?
If the answer is no, it’s more of a marketing slogan than a core value.
Real, practiced values separate great organizations from the rest.
Most leaders aren’t willing to boldly pay that price.
The best ones understand it’s not a cost to the bottom line.
It’s their moat; the ultimate protection of their bottom line.
