Next Thursday, for the seventh time, I am going to Omaha,
Nebraska, for the Berkshire Hathaway annual meeting. But this
is the first time that I find myself respecting
Mr. Buffett a little bit less than the year before.
One of Berkshire Hathaways largest and oldest stock
holdings, Coca-Cola Co., held a proxy vote yesterday, and its
management clearly decided to award itself too much stock.
Warren Buffett acknowledged in an interview that he is against
the plan: We do not believe it would be consistent with
Berkshires long-ingrained culture to support such a plan
at any of your equity holdings.
However, instead of expressing with his proxy ballot what he
really feels, he abstained from voting against the plan, and
explained: I could never vote against
By failing to vote against something that was clearly wrong,
Buffett, who in my mind (until yesterday) used to be a moral
compass for corporate America, became another middling American
politician the common type that all of us respect so
little, the one that votes not for what he believes in but for
what is going to keep him in the good graces of his party or
get him reelected.
When your company owns 10 percent of another company (even
if it is Coke), there is a responsibility that comes with the
investment. But when you are Warren Buffett, who constantly
speaks out against excessive compensation, that responsibility
is even greater.
There should be no double standard for Coca-Cola or for
Buffett. After paying its management millions of dollars to run
a company a monkey could run (Buffetts words,
not mine), shareholders shouldnt have to fork over an
additional 14 to 16 percent over four years to management to
incent them to do their jobs running a company with such
a significant competitive advantage (which was there long
before these executives arrived) that any MBA student with a C-
average could operate.
We dont own Coke and probably wont own it unless
the price gets cut by half, so my tirade here is not as a
wounded shareholder but as an American. Its what Buffett
said in a CNBC interview that bothered me the most:
Its kind of un-American to vote no at a Coke
meeting. I would not want to live in a country where
everyone always agrees with the powers that be, where people
are afraid to speak up. I lived there once in the Soviet
I could not disagree more with Buffett. Cokes
compensation plan is unjust for the shareholders. It is
American to speak up against injustice yes, even if it
is perpetrated by an American icon such as Coke. Let me correct
that: especially if it is an American icon such as Coke. And
lets be honest: The shareholders, not the management, own
Coke. An injustice is what transpired at the company, even if
83 percent of shareholders who voted were too indifferent to
read the proxy.
It is unpleasant to write something negative about a person
you respect and owe so much in your development as an investor
and as individual. But I am sure the pre-Coke-vote Warren
Buffett, the one who had such a tremendous impact on me, would
want people to disagree with him if he were wrong.
That said, I am still making my annual pilgrimmage to Omaha.
as Ive written in the past, going to the Berkshire
Hathaway meeting is not really about Berkshire Hathaway and not
even about Buffett or his right-hand man Charlie Munger. Omaha,
for these few days in spring, becomes value investor central,
giving me the opportunity to see my value investment friends
from all over the world