NEW YORK (TheStreet) -- That the business oligarch Warren Buffett plays his cards close to his chest is a known fact. But, even to those who follow him closely to the extent of predicting his next move, his recent "controversy" over not voting against an equity compensation plan for employees of Coca-Cola (KO) was a rather unexpected move.
Having always stood in stern opposition to "excessive" compensation in the corporate world, Buffett left both his supporters and opposers with a huge question on why he did what he did.
His abstention, in more ways than one, helped get a generous compensation doled out to approximately 6,500 employees of Coca-Cola company; of which CEO Buffett's Berkshire Hathaway (BRK.A) is the biggest shareholder. However, just a little while later, the CEO "expressed" his displeasure over the compensation plan, calling it "excessive." And that, with his abstention, he wanted to send a strong message that he was "not for it."
A rather curious case, isn't it?
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When quizzed as to why he stayed out of it, instead of being vocal about his opposition to the compensation plan, Buffett said he simply "didn't want to express disapproval to the management by voting against the plan."
Loaded with huge dollops of ambiguity, this move by 83-year-old Buffett shows he is still the classy, astute businessman who will always cover his tracks, in my opinion. A seeded player, Buffett has known how to change the course of the game, without ruining his chances. To bolster his stand, Buffett at the annual meeting of shareholders of Berkshire Hathaway maintained that "going to war" wouldn't yield much and that his abstention sent an even stronger a message.
Buffett's abstention came even after several prominent institutional investors, the Florida State Board of Administration and the Ontario Teachers' Pension Plan, publicly opposed the compensation plan for KO employees and lobbied against it. The one who could have been the lone game changer, Buffett, strategically stayed out of the voting process. This step alone got the plan the required numbers, and it was passed with the support of 83% of KO shareholders standing FOR it.
While this non-move by Buffett kicked up a storm of discussions among his friends, foes and peers in business circles; a widespread and mostly accepted version of the rationale behind this was interpreted as the business conglomerate's interests for 'more than professional relationships'. In other words, Buffett's personal relationships seem to have taken over his business ethics. The man himself had said "Too often, executive compensation in the U.S. is ridiculously out of line with performance. This won't change, moreover, because the deck is stacked against investors when it comes to CEO's pay" -- verbatim.
Truly, when a director decides to watch and not act in line with his thoughts, business houses can turn more and more murkier with deals that aren't too transparent. Shareholders, ahoy!
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.