Shareholder Rights Lawyer Grant Criticizes Buffett for Passivity on Compensation

Monday, 28 Apr 2014 07:26 AM

By Dan Weil

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Investment legend Warren Buffett, CEO of Berkshire Hathaway, admitted to CNBC Wednesday that as a corporate board member, he has voted for executive compensation packages he didn't support.

Stuart Grant, a lawyer who has represented shareholders against corporate boards, wasn't impressed.

"Mr. Buffett's doing a disservice if he is on a board or as a large shareholder isn't pushing back to get the most out of management," Grant told CNBC.

Editor's Note:
Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

Buffett had an explanation for his failure to act. "Taking on a [compensation] committee is a little bit like belching at the dinner table. . . . You can't do it too often. If you do, you find you're eating in the kitchen pretty soon."

Berkshire Hathaway abstained in a vote on Coca-Cola's equity compensation plan Wednesday, because the plan is "excessive," Buffett explained.

But Grant says he needs to do more. "One of the great things about this country has been balance of power. That's exactly what a board needs to do with management. Boards need to be able to say no, boards need to be able to push back," Grant argued.

"A well-functioning board that pushes back on management, that challenges, that offers alternatives without micromanaging . . . are the companies least likely to come under attack by activist investors."

David Winters, CEO of Wintergreen Advisers, was a much more willing opponent of Coke's compensation plan, telling Yahoo it's "potentially highly dilutive to shareholders, unnecessary, unsupported by any strategic rationale and a bad precedent for corporate America."

He added, "Coca-Cola is a great company, and we love it. [But the] massive dilution will hurt potential returns going forward."

Editor's Note: Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

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