Ahead of the annual meeting for Berkshire Hathaway Inc. on May 6 in Omaha, National Legal and Policy Center is sponsoring a shareholder proposal and will again call for a separation of powers between the Chairman and CEO – with both roles presently held by legendary nonagenarian investor Warren Buffett – to proceed on what the company says is inevitable, and to smooth the oncoming leadership transition.
NLPC presented a similar proposal at last year’s meeting, where the organization’s Chairman, Peter Flaherty, said in a speech that since Mr. Buffett is “the face of capitalism, why don’t you do something to save it?” Flaherty will again present this year’s proposal, and plans to address the company’s flawed reasoning for delaying the preordained outcome.
NLPC filed a proxy memorandum with the Securities and Exchange Commission on Friday, which explains why the transition from Mr. Buffett’s concentrated leadership and power should start now instead of waiting until he leaves. The Berkshire Hathaway board of directors oppose NLPC’s proposal in the company’s proxy statement, but state that “once Mr. Buffett is no longer Berkshire’s CEO, a non-management director should be named Board Chair.”
“Warren Buffett turns 93 this year and his top advisor, Charlie Munger, is 99 years old,” said Flaherty. “We are not ageists, but Berkshire Hathaway has already designated who the next CEO and likely Chairman will be, so what are they waiting for?”
Berkshire Hathaway has identified Gregory Abel, Chairman and CEO of subsidiary Berkshire Hathaway Energy Company, as Mr. Buffett’s future successor as CEO.
NLPC argues in its report to the SEC that the company’s identity is inextricably linked with Mr. Buffett’s, and if there is not an immediate transition or “handoff” to the next generation of leadership, it will only be more difficult for Berkshire Hathaway to shift from its personality-driven image to a performance-based one.
Also, NLPC calls into question Mr. Buffett’s reticence to provide guidance to CEOs of companies in Berkshire Hathaway’s portfolio, such as American Express, Apple, and Coca-Cola. All three companies have suffered a backlash over their involvement in divisive political issues, a practice the celebrated investor has warned against in the past. NLPC argues that Mr. Buffett’s influence could improve the performance of the companies owned by Berkshire Hathaway.
“Warren Buffett clearly still has his mental faculties and his acumen,” Flaherty added, “but Berkshire Hathaway’s loyal investors need to see how the succession plan will work for the long-term interests of the company. He has been different from every other Chairman and CEO in history, he needs to recognize that, and he should give his successor Greg Abel a running start for the future.”
Founded in 1991, NLPC promotes ethics in public life and government accountability through research, investigation, education, and legal action.
For more information or to schedule an interview with Paul Chesser, contact Dan Rene at 202-329-8357 or firstname.lastname@example.org.
Please visit http://www.nlpc.org.
National Legal and Policy Center