Warren Buffett’s company rejects proposals, but it faces lawsuit over how it handled one last year
Harold and Caroline Ernst of St. Louis chat with fellow shareholders as they wait for the Berkshire Hathaway annual meeting to begin on Saturday, May 4, 2024, in Omaha, Neb. (AP Photo/Rebecca S. Gratz)
OMAHA, Neb. (AP) — Shareholder proposals are usually uneventful at Berkshire Hathaway’s annual meeting. But Warren Buffett and the company are now facing a lawsuit over the way one presenter was treated last year.
Peter Flaherty with the National Legal and Policy Center came back with another proposal this year on a different subject even after he was cut off in the middle of his presentation last year and arrested for trespassing. The charges were later dropped, but Flaherty decided to sue because of the way he was treated to stand up for any shareholder who wants to bring a proposal. He said he had never had trouble at dozens of meetings he has presented at since 2005, including Berkshire’s 2022 meeting.
“I’ve never been interrupted while making a shareholder presentation. I’ve never had my mic cut, and I’ve never been removed from a meeting room. And I’ve certainly never been arrested,” Flaherty said, “Those things were unprecedented for me.”
The issue last year was that Flaherty questioned the character of one of Buffett’s best friends and a former Berkshire board member, Bill Gates. Flaherty suggested that Buffett’s close association with Gates could hurt Berkshire’s reputation because of reports that Gates had been associated with Jeffrey Epstein before he was arrested for sex trafficking. So he was proposing that Berkshire give someone else Buffett’s chairman title while leaving him as CEO.
Buffett has donated billions to Gates’ foundation over the years and plans to give him the bulk of his fortune to distribute.
Berkshire didn’t immediately respond to the federal lawsuit that was filed Friday, and it wasn’t mentioned during Saturday’s meeting. Berkshire officials didn’t even address any of the proposals during the meeting — instead they relied on their statements of opposition that were filed in the official meeting proxy.
Buffett stayed silent during the business meeting after spending all day Saturday answering shareholder questions at the main part of the shareholder meeting. He let his eventual successor Vice Chairman Greg Abel take the lead. He only reminded the presenters of all six proposals to keep their comments related to the proposals.
Flaherty’s proposal was one of six rejected at Berkshire’s meeting this year. They were all opposed by the board, and Buffett still controls roughly one-third of the vote so anything he opposes is almost certain to fail. None of the proposals received more than 85,000 votes. Flaherty’s proposal only drew 6,150 votes while getting 443,544 votes against it.
Some of the other proposals rejected Saturday included ones to require Berkshire to create reports on climate change risks and diversity and inclusion efforts at the massive conglomerate. Another proposal would have required Berkshire to create a board committee focused on railroad safety.
The safety chief for the SMART-TD rail union that represents conductors and other rail workers, Jared Cassity, said that if BNSF wants to argue that safety is the railroad’s top priority, Berkshire’s board should focus on it and review staffing and operational practices to help prevent derailments like the disastrous one Norfolk Southern had last year in East Palestine, Ohio.
“Railroad safety requires effective board oversight,” Cassity said.
Berkshire argued that BNSF is already focused on improving safety and doesn’t need more oversight.
With regard to the other proposals, Berkshire officials argued that such reports would be cumbersome because of the decentralized way the company is run and unnecessary. Plus, some of its subsidiaries like its massive utility unit already produce reports on greenhouse gas emissions, Berkshire said.
This year, Flaherty was allowed to make his case that Berkshire should produce a report on the risks of doing business in China, before the proposal was summarily rejected.
“China poses unique risks for Berkshire Hathaway,” Flaherty said, arguing that the company’s existing disclosures about subsidiaries like Fruit of the Loom that have factories in China are inadequate.