He didn't want to "go to war" with management, says Warren Buffett, responding to the first question asked of him at the Berkshire Hathaway (BRK.A, BRK.B) annual meeting: Why did he abstain from voting on the controversial equity compensation plan for Coca-Cola (KO) executives?
"You keep belching at the dinner table, you'll be eating in the kitchen," says Buffett, describing the clubby culture of corporate boards where being agreeable keeps you on the inside and being confrontational gets you blackballed. "I've voted for compensation plans in various places that are far from what I would have designed myself ... That is the way boards work."
A shareholder proposal requesting Berkshire board consideration of a dividend received less than 2% of the vote, pleasing to Buffett who believes he and Charlie Munger can do a better job of allocating company capital than returning it to shareholders. Still, with $40B and rising in Berkshire's coffers, even Buffett concedes the day is coming when the company has "more cash than we can intelligently invest."
"That error that they made doesn't bother me," says Buffett of Bank of America (BAC), which had to suspend its capital return plan after miscalculating capital levels. "It doesn't change my feeling about Bank of America's risk management one iota."
Mungerisms: Comparing Berkshire book value to the S&P 500 is "insane" and makes it harder for Buffett to look good. "Warren sets a ridiculously high standard. The last couple of years added $60B in value ... If that's failure, then I want more of it."