Crony Capitalism and the Oracle of Omaha

I am back from the Berkshire Hathaway annual meeting in Omaha, Nebraska, and my brain is still spinning from the dozens of meetings and stimulating conversations. In a series of articles over the next few weeks, I’ll try to download the thoughts that were triggered by this trip, a lot of them unrelated to the main event — the Warren Buffett & Charlie Munger show — but rather by-products of the conversations I had.

After I wrote about my disappointment with Buffett’s mishandling of Coca-Cola Co.’s “excessive” compensation plan, I got an e-mail from Carol Loomis asking me if I wanted to ask Mr. Buffett a question about Cokegate. Loomis is the Berkshire Hathaway CEO’s longtime friend, editor of his annual shareholder letter and one of three reporters at the annual meeting who ask Warren and Charlie questions submitted by readers.

Here is the question I submitted:

I’ve been coming to shareholder meetings for seven years, and for the first time I’m seeing two Warren Buffetts: The first is the moral compass of corporate America — the standard of corporate ethics and integrity (the one we see in the Salomon Brothers scandal intro video year after year).

And then last week a second Warren Buffett emerged, the one who commented on Coke’s excessive compensation plan: “We didn’t agree with the plan. We thought it was excessive.” But then as a significant shareholder he abstained from voting on the plan, saying, “I could never vote against Coca-Cola.” The second Buffett behaved like just 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 reelected.

Forty thousand people did not come to Omaha to see the second Buffett, the one that chose crony capitalism; they came to see the first one, who knows the difference between right and wrong. So I would like the first Buffett to judge the behavior of the second one.

— Vitaliy Katsenelson, Chief Investment Officer, Investment Management Associates, Inc., Denver, Colorado

Loomis ended up using someone else’s question on that topic, which asked (I am paraphrasing), “This spring, Coca-Cola proposed a large option program for its top managers. Why did Warren Buffett not say he was against the plan beforehand? Why did Berkshire Hathaway abstain rather than vote against?”

Continue reading on ContrarianEdge.com 

View Comments (2)

Recommended for You

  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • Our Best-Ever Value Plan for Your Business

    New prices on our Mobile Share Value Plans on the nation's most reliable 4G LTE network.

    AdChoicesAT&T® Small BusinessSponsored
  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Truck firm faces paying millions in Amtrak crash

    A Nevada trucking company could be forced to pay more than $5.7 million if a judge formalizes a jury verdict that faulted one of its drivers for a fiery 2011 crash with an Amtrak train that killed six people and injured dozens. A federal jury in Reno awarded $4.5 million to Amtrak and $210,777 to…

    Associated Press
  • A Lot's Changed Since You Graduated High School

    Including the cost of college tuition. Start saving for a child's education today with the MEFA® U.Fund College Investing Plan.

    AdChoicesFidelity InvestmentsSponsored
  • Apple iPhone 6 Weekend Sales May Miss, No Worries, Says Bernstein

    Bernstein Research's Toni Sacconaghi today reiterates an Outperform rating on Apple (AAPL) stock, and a $108 price target, warning that Apple may miss high expectations for first-weekend sales of the iPhone 6 and 6 Plus when they go on sale this Friday, but that it may not matter much. Observes…

    Barrons.com
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • 'Modern slavery' in Malaysia electronics factories

    Nearly one-third of the 350,000 workers in Malaysia's electronics manufacturing sector -- a major supplier for leading global brands -- suffer labour conditions akin to "modern slavery", a report released Wednesday said. The study by US-based fair-labour organisation Verite said at least 28 percent…

    AFP
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • China Opens Gold Market to Foreigners Amid Price Ambition

    China will give foreign investors direct access to its gold market for the first time today as the biggest-consuming nation seeks to exert more influence over prices while boosting the yuan’s global use. The Shanghai Gold Exchange will start trading contracts in the city’s free-trade zone that will…

    Bloomberg
  • Enjoy this refreshing Triple Play offer!

    Get FIOS TV Mundo starting at $79.99/mo. w/ no annual contract + 2-yr. price guarantee. Or sign for 2 yrs. & get a $300 prepaid Visa. Click here.

    AdChoicesVerizon FiOS ®Sponsored
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • Play

    Top Starter Funds for Investors on a Shoestring

    Morningstar's Christine Benz highlights some of her favorite ETFs and low-minimum-investment funds for new investors.

    Morningstar
  • Iron ore miners battle for survival as 'perfect storm' hits

    High-cost Australian miners are battling for survival as plunging iron ore prices push many to breaking point, with analysts seeing no significant short-term recovery as Chinese demand for steel wanes in line with sliding property prices. Australia, the world's largest exporter of iron ore, is…

    AFP
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Venture Capitalist Makes Case Against 'Shark Tank'

    If you watch the TV show "Shark Tank" as entertainment and not to obtain a startup education, you will be benignly inspired by fellow entrepreneurs. "Shark Tank" is a reality competition show that features entrepreneurs pitching business ideas to a panel of potential investors, referred to as…

    The Wall Street Journal
  • Don't care about Alibaba? Here's why it may matter

    When the Alibaba Group Holding prices its initial public offering Thursday, small businesses in particular will be watching. Founder Jack Ma -the former English-teacher-turned-dot-com billionaire-has touted his e-commerce platform as a way for smaller merchants to expand their international…

    CNBC
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • Airbus Keeps A380 Production Rate Even With Scarce Orders

    Airbus Chief Executive Officer Fabrice Bregier said the company can maintain a production rate of almost 30 A380 a year even amid slack demand, and will seek to build fresh interest with superjumbos coming off lease. Bregier, speaking at the Airbus factory in Hamburg, where Qatar Airways Ltd. took…

    Bloomberg