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?”
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