Buffett Avoids War but Not Backlash

NEW YORK (TheStreet) -- Attendees were shocked at Berkshire Hathaway's (BRK.A) Annual Shareholder meeting this past weekend when Chairman Warren Buffett defended his choice to abstain from voting on an equity compensation plan for Coca-Cola (KO). The proposed plan is easy fodder for those who argue against excessive compensation for C-suite employees as it promises to deliver 340 million options to executives over four years, effectively diluting other shareholders.

After a barrage of questions at the event, Buffett -- known for his populist approach to capitalism -- defended his abstention by saying, with regard to being a constant voice of dissent, "If you keep belching at the dinner table, you'll be eating in the kitchen."

There was also some media backlash Monday given how vocal Buffett has been about executive pay. Interestingly enough, apparently Carl Icahn took issue w/ Buffett's abstention.

While it is reasonable to trust Buffett's judgment -- after all, he didn't become the "Oracle of Omaha" for being thick -- it is also reasonable to hope for more.

Buffett famously championed for a tax code with fewer loopholes after realizing that his effective tax rate was lower than that of his secretary's. Taking on the IRS may be a bit of a stretch a single man, but taking a stand on executive pay when you're Warren Buffett is well within your scope of expertise.

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Buffett privately voiced his concerns about the controversial plan with Coca-Cola's leadership. To do otherwise, he said, would start a war. However, if we are serious about changing inflated executive compensation, isn't a war needed? Also, who better to lead the charge than Buffett with his populist approach to capitalism?

Detractors from Coca-Cola's proposed compensation plan are merely requesting something that is reasonable.

The Coca-Cola brand has taken some hits in recent years as American consumers drink less soda in favor of coffee and juices. While compensation is a great motivator, compensation alone rarely spurs the type of innovation Coca-Cola needs to remain relevant in future decades. One fears that the proposed plan damages shareholders in the short term, and an iconic American brand in the long term. 


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

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