FRI, APR 22, 2022
California's big state pension fund wants Buffett out as chairman
The California Public Employees Retirement System, better known as CalPERS, will vote for a shareholder proposal that would, in effect, remove Warren Buffett as Berkshire Hathaway's chairman.
The move, however, reflects a general preference that the roles be separate and doesn't specifically target Buffett or his performance.
The measure, to be considered at next weekend's Berkshire shareholder meeting, (which will be live streamed on CNBC.com), is sponsored by the National Legal and Policy Center.
It calls on the board to require that its chair be independent of the company. As CEO, Buffett would not meet that requirement.
In its supporting statement, the group says "these roles – each with separate, different responsibilities that are critical to the health of a successful corporation – are greatly diminished when held by a singular company official, thus weakening its governance structure."
The Berkshire board is recommending shareholders vote against the proposal, saying "that as long as Mr. Buffett is Berkshire’s CEO, he should continue as Board Chair and as Berkshire’s CEO."
But it notes that "as has been stated on numerous occasions by Mr. Buffett in the past, once Mr. Buffett is no longer Berkshire’s CEO, a non-management director should be named Board Chair."
Buffett has said his son Howard should get the chairman role.
Warren Buffett and Charlie Munger ride in a cart outside the exhibition hall at the 2019 Berkshire annual meeting. CNBC/Fred Imbert
While Buffett would be affected, efforts by advocates for corporate governance reforms to separate CEO and board chair positions are not aimed at him alone.
The resolution's sponsor tells the Wall Street Journal it has filed similar proposals for Goldman Sachs, Coca-Cola, Mondelez, Salesforce.com, and Home Depot.
And CalPERS tells the Journal it generally supports separating the roles at all the companies in which it owns stock.
It certainly doesn't make a big deal about it in its pre-meeting SEC filing that discloses how it will vote its Berkshire shares.
It merely mentions that the shareholder proposal is one of three it will support, along with calls for Berkshire to report on the greenhouse gas emissions associated with its insurance operations and its efforts to increase employee diversity.
Instead, the CalPERS filing focuses on another proposal it is co-sponsoring that asks the board to "publish an annual assessment addressing how the Company manages physical and transitional climate-related risks and opportunities."
It also discusses why it will withhold votes for two directors on the Berkshire Audit Committee, Susan Decker and Meryl Witmer, for not disclosing environmental risks and "a lack of responsiveness" to its "engagement requests."
It does not say anything about withholding a vote for Buffett as chairman.
Buttons in a mock campaign to elect Berkshire Hathaway Vice Chairman Charlie Munger as Chairman are pictured at the annual Berkshire Hathaway shareholder meeting in Omaha, Nebraska, May 4, 2019. REUTERS/Scott Morgan
While CalPERS is the largest state public pension fund in the country with over $450 billion in total assets under management, it won't have a lot of clout at Berkshire on its own.
It owns nearly $2.3 billion worth of Berkshire shares, but that's just 0.3% of its market value.
Buffett alone has a 32% voting interest in the company, and shareholders have strongly rejected past shareholder proposals opposed by Buffett and the board.
In last year's balloting for chairman, Buffett received 97.8% of the vote.
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BERKSHIRE'S TOP U.S. STOCK HOLDINGS - April 22, 2022
Berkshire's top holdings of disclosed publicly-traded U.S. stocks by market value, based on today's closing prices.
Holdings are as of December 31, 2021 as reported in Berkshire Hathaway’s 13F filing on February 14, 2022, except for Apple, Bank of America, and U.S. Bancorp, which also include shares held as of December 31, 2021 as disclosed in New England Asset Management’s 13F filing on February 14, 2022, and except for Occidental Petroleum, which is as of March 16, 2022.
In addition to U.S. stocks, shares held as of December 31, 2021 of China's BYD, as listed in Buffett's 2021 letter to shareholders, are included. The price of those shares in U.S. trading is used to approximate the current market value of the position. The value of the stake as a percentage of the company's market value is fixed at what was listed as of December 31, 2021 in the letter.
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
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-- Alex Crippen, Editor, Warren Buffett Watch