(Bloomberg) — California Public Employees’ Retirement System, the largest U.S. public pension fund, said it plans to vote for a shareholder proposal that Berkshire Hathaway Inc. select an independent chairman, marking a rare rebuke of billionaire Warren Buffett, who’s both head of the board and the conglomerate’s chief executive officer.
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The fund has more than $450 billion in assets under management and about $2.3 billion in Berkshire shares, it said in a filing Tuesday. The pension is supporting a proposal from the non-profit National Legal and Policy Center, also a Berkshire shareholder, that calls for the company to name an independent chair, saying the governance structure is weakened by having the chairman and CEO roles held by the same person.
Berkshire opposes the proposal, saying last month that Buffett should continue in both roles.
“The board believes that as long as Mr. Buffett is Berkshire’s CEO, he should continue as board chair and as Berkshire’s CEO,” the Omaha, Nebraska-based company said at the time. “However, as has been stated on numerous occasions by Mr. Buffett in the past, once Mr. Buffett is no longer Berkshire’s CEO, a non-management director should be named board chair.”
Investors across corporate America have been pushing companies to separate the chairman and CEO roles. Buffett has long held both titles at Berkshire and has rallied behind executives at other companies who occupy both positions, including JPMorgan Chase & Co.’s Jamie Dimon and Bank of America Corp.’s Brian Moynihan. At 41% of S&P 500 companies, both titles are held by the same person, according to data provider ISS Corporate Solutions.
Calpers has rallied behind similar proposals in the past. In 2015, the pension, along with another California fund, voted against a proposal to keep Moynihan as chairman of Bank of America — a resolution that passed, with Moynihan continuing to hold both titles. A similar drama played out at JPMorgan in 2013, but Dimon remains chairman and CEO of the bank. The New York-based firm said in an April proxy statement that the lender plans to separate the two roles during the next leadership transition, and left open the possibility that Dimon could remain chairman when he eventually steps down as CEO.
Buffett has laid out a plan to have one of his sons, Howard Buffett, serve as non-executive chairman of Berkshire when he steps down, while Greg Abel, a longtime deputy who previously ran Berkshire’s sprawling energy business, will take over as CEO.
Buffett has a 32% voting interest in the company, according to the company’s proxy. Calpers holds 0.13% of the Class A shares and 0.44% of the Class B shares, according to data compiled by Bloomberg.
Succession questions have long loomed over Berkshire given that the company is helmed by two nonagenarians: Buffett is 91, and his longtime business partner Charlie Munger, a Berkshire vice chairman, is 98. Buffett last year confirmed that Abel is the deputy chosen to succeed him if and when he steps down.
But Buffett has given no indication that his departure is imminent. His annual letter released earlier this year made no mention of the succession news, although Abel was given a section of the report to talk about sustainability efforts in some of Berkshire’s businesses.
Berkshire will hold its annual shareholders’ meeting on April 30 in Omaha.
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Source: finance.yahoo.com