91-year-old “stock god” Buffett encounters a workplace crisis?
On April 19, the California Public Employees Retirement Fund (CalPERS), the largest public pension in the United States, filed with the U.S. Securities and Exchange Commission (SEC) that it plans to vote for a Berkshire Hathaway shareholder proposal that would Warren Buffett will be fired as chairman.
Berkshire's board has opposed the proposal and has previously said Buffett should remain Berkshire chairman and CEO. Industry insiders say the proposal will not be easy to pass, after all, Buffett himself owns 32% of Berkshire's voting rights.
Large Institutional Shareholder Proposal
Dismissal of Buffett's chairmanship
CalPERS said in a filing on April 19 that it would vote at Berkshire's April 30 shareholder proposal to oust Buffett's Berkshire chairman but remain CEO. .
The proposal to remove Buffett from the chairmanship was made by the nonprofit National Legal and Policy Center, SEC filings show. The agency believes that if one person serves as both CEO and chairman, the functioning of both positions will be “substantially diminished”, resulting in weaker corporate governance.
In addition to voting to remove Buffett from the chairmanship, CalPERS said it would not support the re-election of longtime audit committee members Susan Decker and Meryl Witmer, citing a lack of response to requests for “accurate and timely disclosure of environmental risks and opportunities.” .
CalPERS has more than $450 billion in assets under management and holds about $2.3 billion in Berkshire stock.
The board objected
Berkshire's board has previously expressed opposition to the proposal.
The board of directors has said that someone other than management should serve as chairman after Buffett is no longer in charge of the company in the future. But Buffett should remain chairman and CEO as long as he remains at the company.
Buffett has been Berkshire's CEO since 1965 and the company's chairman since 1970. Notably, Buffett owns about 16% of Berkshire and controls about 32% of the voting power.
Berkshire plans to make Buffett's son Howard Buffett non-executive chairman after his father leaves, while current vice chairman Greg Abel will serve as CEO,media reported.
However, Berkshire officials and Buffett himself have not mentioned the above plans reported by foreign media. At Berkshire's shareholder meeting at the end of this month, whether Buffett's successor will be decided is still a big concern.
CalPERS was attacked at last year's shareholders meeting
In fact, as a major institutional shareholder of Berkshire, CalPERS has a long history of “feud” with Buffett.
CalPERS has been persistent in raising climate change-related issues such as “Berkshire should report on its plan to reduce greenhouse gases and improve diversity” and “Berkshire should report on its plan to address climate risks”. These issues are opposed by Berkshire's board of directors.
Before the 2021 Berkshire shareholder meeting, Buffett called on everyone to vote against a proposal on climate change put forward by some major institutional shareholders.
In response to this issue, Buffett said at last year's shareholders meeting that Berkshire's investment in business infrastructure is very large, higher than all companies. Closing coal plants was under consideration, but the company needed to have enough other sources of energy before it could shut down. “Companies already know the answer to climate change, and a lot of people who question it, I can say they haven't read our earnings,” Buffett said bluntly.
Greg Abel, the current vice chairman and former head of Berkshire's energy business, said at last year's shareholders meeting, “We had raised climate change as a threat in 2007, talking about innovation, how to set reasonable goals, and then we It's all about decarbonization.” Berkshire has announced that it will spend $18 billion on transmission grid infrastructure, with another $13 billion over the next decade, he said. In 2020, 16 thermal power plants have been closed, 16 will be closed by 2030, and all coal-fired thermal power plants can be closed before 2050.
Leave a Reply