Calpers Plans to Vote to Replace Warren Buffett as Berkshire Hathaway’s Chairman

hank

“The nation’s largest pension fund is planning to vote for a proposal that would unseat Warren Buffett as chairman of Berkshire Hathaway Inc. The $470 billion California Public Employees’Retirement System, known as Calpers, said in a regulatory filing that it would support a proposal by the National Legal and Policy Center that Berkshire Hathaway’s board chair be independent. That would disqualify Mr. Buffett, who is also the company’s chief executive, from holding both positions. Having the same person hold both roles weakens corporate governance, the National Legal and Policy Center said in the shareholder measure published ahead of Berkshire’s April 30 shareholder meeting.

“Berkshire Hathaway’s board responded by saying it opposes the measure and believes Mr. Buffett should continue to fill both roles. After he departs, a board member who isn’t part of management should become chair, the board said. A representative from Berkshire wasn’t immediately available for comment. The measure likely faces long odds. Mr. Buffett alone has a 32% voting interest in Berkshire. Calpers supports re-electing Mr. Buffett to the Berkshire board. Companies are increasingly deciding not to have their chief executives serve as chair, according to consulting firm Spencer Stuart. As of last year, 59% of companies in the S&P 500 had split the chair and chief executive roles.”

From: The Wall Street Journal, April 21, 2022

Sven

Companies are increasingly deciding not to have their chief executives serve as chair

Given Warren Buffet’s advanced age, they may have a point to have a second person to assume part of the responsibility. The vice chairman, Charlie Munger, is several years older than WB.

BaluBalu

I have owned BRK for sometime but never voted my shares. I just voted to keep WB as Chairman. In principle, I like splitting the role in companies where the CEO is not a founder or plays fast and loose. Not sure why National Legal and Policy Center or CALPERS got new religion about governance, as if governance was not an issue in Corporate America until now.

yogibearbull

I think that son Howard Buffett is the non-exec successor Chairman (nepotism is practiced here) and Greg Abel is the successor CEO.

CALPERS is just making noises. It and proxy firms may be making a point about WB summarily rejecting some governance and disclosure related proposals that he may like to be implemented elsewhere but not at his "shop". WB says just trust me until I die.

JonGaltIII

See CALPERS vs. Jamie Dimon or vs. Brian Moynihan. The outcome will be the same. As @yogibearbull said it's just "noise".

BaluBalu

@yogibearbull, I get the balanced view you presented. For 50+ yrs WB has not violated shareholders’ trust that allowed him a free rein. No particular reason to withdraw the trust now, unless shareholders have evidence he has violated their trust. Putting more restrictions on him will decrease the company’s performance without any benefits. I think it is good that his son (a long time board member and shareholder) has agreed to be a future non-executive Chairman. None of his family held any executive positions at the company, which is unusual for any US company with such a large family ownership.

msf

and disclosure related proposals

Berkshire Hathaway conglomerate ... owns energy companies, a railway, insurance companies and other businesses that pump huge amounts of carbon dioxide into the atmosphere. As Mr. Buffett holds out, critics complain that Berkshire’s businesses are doing less to cut emissions than similar companies.

Mr. Buffett has repeatedly resisted shareholders who want Berkshire to provide detailed climate disclosures that encompass the whole company, not just parts of it, and spend more on sustainability. ...

Despite Mr. Buffett’s insistence that his businesses are doing a lot to fight climate change, the company’s energy subsidiary in particular has set weaker targets for carbon emissions than other utility companies like Duke Energy and Dominion Energy. ...

On getting to net zero, Berkshire Hathaway Energy uses looser language than other utilities, saying it is “striving to achieve net zero greenhouse gas emissions by 2050 in a manner our customers can afford, our regulators will allow and technology advances support.” Xcel Energy and Duke Energy have said they are committed to reaching net zero carbon emissions by 2050.

https://www.nytimes.com/2022/04/25/business/energy-environment/warren-buffett-climate-change.html

Proxy statement: https://www.sec.gov/Archives/edgar/data/1067983/000119312522073447/d208624ddef14a.htm

As fund investors, we might want to watch how our funds vote. The NYTimes article suggests that Vanguard, Blackrock, and State Street will likely support the environmental disclosures (there's also a workplace disclosure proposal).

JonGaltIII

“I think the world of Larry Fink, but I’m not sure I want him to be my emperor,” Munger said.

BaluBalu

What language anybody uses to indicate what they will do by or in 2050 can be a complete BS and does not impress me. I am interested in companies' current actions on climate and not words. NYT, like most media these days, has devolved into selling outrage.

Let us not have fragmented discussions about various utilities. Let us find a credible source that lists all US utilities and their current impact on climate, including how much they have invested in renewable energies as a percentage of the total GWH of energy they sell. It is of no use to me if somebody pollutes when it is avoidable and then plants a bunch of trees or buys carbon credits. It is the same when somebody abuses his employees (or family members) and then participates in charity events. Same with Blackrock being one of the biggest pimp of Russian securities and then ESG shaming US companies.

Old_Joe

Let us not have fragmented discussions about various utilities. Let us find a credible source that lists all US utilities and their current impact on climate, including how much they have invested in renewable energies as a percentage of the total GWH of energy they sell. It is of no use to me if somebody pollutes when it is avoidable and then plants a bunch of trees or buys carbon credits. It is the same when somebody abuses his employees (or family members) and then participates in charity events. Same with Blackrock being one of the biggest pimp of Russian securities and then ESG shaming US companies.

I agree.

BaluBalu

BTW, I live in PG&E service area. Part of the energy PG&E supplies is renewable sourced (and we pay extra for the renewable energy). Should I rank PG&E high for their climate endeavor? Not with all their negligence resulting in fires (and deaths of their customers). A peculiarity I learned about PG&E pricing and this may be true for other utilities is that the customers that live in sparsely populated, wooded (expensive real estate!) areas whose frequently downed overhead power lines require continual repair and reinstallation pay the same rates as those that live in densely populated areas with underground power lines (which were originally installed by the builder).

LewisBraham

I am interested in companies' current actions on climate and not words. NYT, like most media these days, has devolved into selling outrage.

Since when? Climate science is not new:https://en.wikipedia.org/wiki/History_of_climate_change_science

In 1896 Svante Arrhenius used Langley's observations of increased infrared absorption where Moon rays pass through the atmosphere at a low angle, encountering more carbon dioxide (CO2), to estimate an atmospheric cooling effect from a future decrease of CO2. He realized that the cooler atmosphere would hold less water vapor (another greenhouse gas) and calculated the additional cooling effect. He also realized the cooling would increase snow and ice cover at high latitudes, making the planet reflect more sunlight and thus further cool down, as James Croll had hypothesized. Overall Arrhenius calculated that cutting CO2 in half would suffice to produce an ice age. He further calculated that a doubling of atmospheric CO2 would give a total warming of 5–6 degrees Celsius.[32]

At one point about a decade ago 97% of climate scientists concurred based on many decades of research that anthropogenic climate change--the kind exacerbated by human activity, not the "natural" kind the current deniers fixate on--was a serious problem and threat. Many of the remaining 3% had ties to the fossil fuel industry. Now that percentage is 99% as the evidence is overwhelming. I would add that the evidence for climate science is far more conclusive than any financial theory currently accepted in the market or on Wall Street.

So, is it "selling outrage" for the NYT to cover what companies are doing to address the problem? Or is it whataboutism or a false moral equivalency to say all media is flawed and sells outrage and therefore the NYT is too?: https://en.wikipedia.org/wiki/Whataboutism

Mark

Thank you @LewisBraham. I had a whole bunch of different words I was going to use but decided to calm down first.

msf

Thanks Lewis. Pointing to PG&E is another example of whataboutism. And not especially meaningful even so. It's conflating issues of distribution and production.

A bad actor? Sure, nothing new here. Can you say Diablo Canyon? Forty years and still not decommissioned. San Bruno? Bankruptcy shell games? Nothing new here either. In 2001 PG&E Corporation moved assets around so that they could not be reached when its Pacific Gas and Electricity Company subsidiary declared bankruptcy.

None of this makes Berkshire Hathaway any less problematic. S&P reports that Berkshire Hathaway is the largest operator of coal-fired power plants without selective catalytic reduction technology. Further, it will keep operating nearly half of those plants past 2030. It has said that it will retire those plants by 2050, but as you wrote, 2050 commitments are not to be believed.

BaluBalu

Guys, My point about PG&E is to give another example of the fallacy of looking at a company in isolation or its specific actions in isolation. If one is interested in talking about a company’s social responsibility, I would prefer it is discussed in the context of the entire industry in which it operates - which is what I said when I asked to get a listing of all the utilities in the country and climate impact of their actions before I gave examples of the importance of doing so. Some of you already know details matter. It is interesting how what I suggested is turned into giving me a lecture on climate denial and whataboutism. I am not interested in winning or debating. I am also not interested in changing forum members’ mind or imparting morals. I am not smart enough to conclude from information or data in isolation. I am not nominating WB to sainthood or BRK as the standard all companies must follow. To me, if a company is not breaking the law, then I want to see how it ranks in its industry on long term sustainability. No company can go on being irresponsible without its stock getting creamed and I have no interest in losing my wealth in it. However, I can not take my irritation from my helplessness about politicians on others or companies. Sorry if I touched a raw nerve.

BaluBalu

This all started with my sharing why I voted to keep WB a Chairman. Just to be clear, I am not telling or asking anybody to vote with me.

LewisBraham

It is interesting how what I suggested is turned into giving me a lecture on climate denial and whataboutism.

That probably would not have happened and certainly would not have in my case if you hadn't taken a specific topic of Berkshire Hathaway and PG&E's environmental records and used that as a platform to make a blanket statement and generalization such as "NYT, like most media these days, has devolved into selling outrage." I think what the NYT's is doing in covering such topics is vital, and I don't see reporting the facts of BRK's record as "selling outrage."

BaluBalu

Sorry, also not interested in and have no use for platforms.

msf

If one is interested in talking about a company’s social responsibility, I would prefer it is discussed in the context of the entire industry in which it operates

If other utilities were emitting GHGs at a rate that would lead to 5°C increase in global temperatures, then would a utility emitting gasses at a rate raising temps just 4°C be a responsible company? Or if a utility operated coal plants more efficiently than others, so that it lost less money per KWh, would that be good for investors or just less bad?

But all we're talking about here are disclosure proposals. So here's a look at BH's disclosures in the context of the entire industry in which it operates.

The investor-led initiative Climate Action 100+, whose members manage more than $54 trillion in assets, has been trying to cut through companies’ greenwashing statements by demanding uniform disclosures about their decarbonization plans. The group released its first-ever scorecard of climate-related disclosures in March [2021], and many utilities performed poorly — but none so poorly as Berkshire Hathaway, which failed by every metric.

Since that was written, the March 2022 benchmark report was released. BH still failed every metric.

For completeness only, coal fired plants are today uncompetitive with newly constructed renewable power plants (from my Environmental Economics class notes yesterday, among other sources). Also, of the twenty private or investor-owned utillties generating the most electricity in the US, BH ranks in the worse half for CO₂, SO₂ NOx emitted per KWh (per MJ Bradley's latest air emission benchmark report).