Buffett defends Coke, BNSF at Berkshire annual meeting

May 05, 2014 - 12:57:55 am
Buffett tastes an ice cream during the trade show at the meeting in Omaha.

OMAHA: Warren Buffett defended his recent controversial vote on executive pay at Coca-Cola Co and disappointing performance at railroad BNSF, as investors grilled him on his Berkshire Hathaway Inc conglomerate at its annual shareholder meeting.

The investment guru was peppered with questions at the meeting, part of a mostly festive weekend that Buffett calls “Woodstock for Capitalists,” following concerns that Berkshire last year missed Buffett’s five-year growth target for the first time in his 49 years at the helm.

Buffett, 83, and Vice Chairman Charlie Munger, 90, took the stage at a downtown Omaha arena as they faced off with the audience and a hand-picked panel often excusing recent worries at the sprawling conglomerate.

“Over any cycle we will over-perform, but there’s no guarantee on that,” he said. Berkshire, he said, is designed to perform best when markets are at their worst, unlike in 2013 when the Standard & Poor’s 500 rose 30 percent.

Buffett was immediately questioned about Berkshire’s decision to abstain from the shareholder vote on Coca-Cola’s equity compensation plan for executives, even though Buffett thought the controversial plan was excessive. That revelation drew sharp criticism in the run-up to the meeting — particularly since Buffett has in the past called options wasteful and akin to a free lottery ticket.

Seated with Munger at a table containing several bottles of Coke and Cherry Coke, Buffett said that “going to war” would likely not have been productive, and that Berkshire’s abstention sent an even more effective message.

“We made a very clear statement about the excessiveness of the plan and, at the same time, we in no way went to war with Coca-Cola,” Buffett said. “I don’t think going to war is a very good idea in most situations.”

Buffett said he had conversations with Coke’s Chief Executive Muhtar Kent, including one in Omaha, where he said he thought the plan was excessive.

“I think the best result for the Coca-Cola Company was achieved by our abstention, and we will see what happens in terms of compensation between now and the next meeting of Coke,” he said. 

Wall Street also came under the spotlight from a person complaining about why more individuals were not being held criminally responsible for recent misconduct, such as from the 2008 financial crisis. “I don’t think there’s anything that changes behaviour more than prosecuting individuals,” Munger said. Reuters