Berkshire Hathaway meeting will be a time of questions for Warren Buffett

05/02/2014 1:14 PM

05/02/2014 9:29 PM

Warren Buffett has long encouraged tough questions at Berkshire Hathaway’s annual meeting and last year went as far as bringing in an investor who was betting on the stock’s decline.

Not so this year. Buffett, the company’s 83-year-old chairman and chief executive officer, struggled to find a “bear” for the gathering, which takes place Saturday before a full house at the CenturyLink Center in downtown Omaha.

“They must be in hibernation,” he told Bloomberg Television’s Betty Liu.

Instead, he asked Morningstar’s Greggory Warren to join two other analysts posing questions during a five-hour session with him and vice chairman Charles Munger, 90. The panel will alternate with journalists and shareholders.

If history is a guide, the Q&A will be informational and entertaining. Both executives are known for wit and wisdom. And while the event is supposed to inform shareholders about the company, the conversation often veers into other territory, like Buffett’s musings on baseball and Paris Hilton.

To keep things focused on Berkshire, shareholders could ask these questions. They’re tough, just the way the CEO likes them:

• Fund manager David Winters kicked up a storm in recent weeks by calling on you to vote against an executive pay plan at Coca-Cola. Berkshire is the soft drink maker’s biggest shareholder, and Winters said the compensation proposal violates many of your long-held principles about how companies reward managers. After the plan passed on April 23, you said that it was “excessive” and that you had abstained from voting.

How is Berkshire better off because you abstained and didn’t speak out beforehand about the Coca-Cola plan? How would you suggest shareholders deal with a similar proposal if one is made by Berkshire after you’re no longer running the company?

• Berkshire joined Jorge Paulo Lemann’s 3G Capital in a $23.3 billion takeover of HJ Heinz last June. The new managers have closed factories, cut thousands of jobs and engaged in belt-tightening around the office as part of a plan to boost margins. That contrasts with Berkshire’s practice of buying great businesses and leaving management alone.

Does the cost-cutting going on at Heinz tarnish the Berkshire brand? And are you applying any of the operating lessons you’re learning from 3G to Berkshire subsidiaries?

• Berkshire railroad BNSF said in December that Matthew Rose was taking on a new role of executive chairman after 13 years as CEO. The company said he would work with managers over the next decade on long-term organizational planning and public policy. He was cited by Barclays analyst Jay Gelb as one of the operating managers who could succeed you.

How has Rose’s job changed, and is he doing work that goes beyond the railroad? Whose idea was the title change?

• Tracy Britt Cool, your 29-year-old financial assistant, has taken on more responsibility since you hired her in 2009. She is the chairman of four Berkshire subsidiaries and was responsible for helping you pick the CEOs that run two of those companies.

Will she become chairman of any more Berkshire businesses and, if so, which ones? How do you see her responsibilities changing under the next CEO?

• For the first time under your leadership, Berkshire’s book value per share just failed to beat the gain of the Standard & Poor’s 500 index over a five-year period. You have said that Berkshire’s growth will be slower going forward and that the company should outperform over future market cycles.

Apart from the stock market rally from 2009 through 2013, why did you fall short? And what kind of returns should investors expect of your successor?

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