Understanding Deep Politics

CalPERS Supports Proposal To Oust Warren Buffett As Berkshire Chairman

CalPERS Supports Proposal To Oust Warren Buffett As Berkshire Chairman

With just a few weeks left until Warren Buffett, 91, plays host to Berkshire Hathaway’s next annual meeting – nicknamed the ‘Woodstock of Capitalism’ – CalPERS, the giant California pension fund that has, in the past, led movements to drop pension-fund allocations to hedge funds due to their high fees, has thrown its support behind a proposal to oust Buffett from his position as chairman of the board at the conglomerate.

The proposal isn’t intended as a slight against Buffett’s leadership, rather, the fund is simply supporting a proposal to separate chairman and chief executive roles, something that’s relatively commonplace on Wall Street, although CalPERS didn’t offer much in the way of an explanation in its filing unveiling which proposals it planned to support at the annual meeting.

The measure was initially proposed by the non-profit National Legal and Policy Center, which is also a Berkshire shareholder. CalPERS owns about $2.3 billion in Berkshire shares (approximately Class A 800 shares and over 5.5 million Class B shares), and has a total of $450 billion in total assets, making it the largest state pension fund in the US. The NLPC has said that managerial oversight is “greatly diminished when held by a singular company official”.

In Berkshire’s proxy statement, the board announced that it would oppose shareholder proposal No. 2, citing reports from Deloitte, the Council of Institutional Investors and proxy advisor Glass Lewis that back up its position.

Berkshire added that it would support Buffett staying on as chairman “as long as Mr. Buffett is Berkshire’s CEO”. Buffett has 32% voting interest in Berkshire, and his latest annual letter to shareholders made no mention of the company’s succession planning – although it was reported last year that Greg Abel, currently chairman and CEO of Berkshire energy, was the top pick to take the reins from Buffett.

However, the board also stated that once “Mr. Buffett is no longer Berkshire’s CEO, a non-management director should be named Board Chair.”

CalPERS also supports a shareholder proposal to require Berkshire to produce an annual climate and sustainability audit, something that many of America’s megabanks (including Citigroup, which kicked off the trend) have agreed to produce. Berkshire’s board also opposes that proposal.

Tyler Durden
Wed, 04/20/2022 – 15:25

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