Berkshire Hathaway 2000 Annual Meeting Transcript
Transcript of the 2000 Berkshire Hathaway Annual Meeting held on April 29, 2000 on Omaha, Nebraska:
(Click here to skip to the Q&A section)
(To see the full transcripts of all Berkshire Hathaway Annual Meetings on record, click here)
Meeting Start – Introduction and Warren explains how the meeting will proceed
Well, first thing I’d like to do is to thank everybody that’s helped us put this on.
As you saw in the movie, I think, at the time, we may have had 45,000 or so people working with Berkshire, with 12.8 at headquarters.
We’re probably up to about 60,000 now, and we still have 12.8, and they take care of putting on this whole meeting.
We get help from people in internal audit, and we get terrific help from the people at all of our companies who work very hard to put on the exhibits. And we hope that you not only visit them, but patronize them, and we’ll give you ample time to do that.
As you can see, I enlisted my family for the movie, and I want to thank them. I want to particularly thank Kelly Muchemore and Marc Hamburg for their work in putting this on. It’s a real project to…
A lot of companies have a whole department that does this and, at Berkshire, Kelly processes 25,000 requests for tickets, and coordinates everything with the exhibitors, and it’s a fabulous job.
Now, we’ll follow our usual routine. We do have a surprise at… a small surprise… at 11:45. It’s not that Charlie’s going to say anything… that would be a big surprise, but… we’ll… well, we’ll have this small surprise for you at 11:45.
The plan is to go through the business part of the meeting here in just a second, and we’ll run from 9:30 to 12:00. Then, after conducting the business meeting, we’ll take your questions.
We’ll go around the room. We have 10 stations. I guess we’ll probably only be using eight stations in this room.
And we have microphones everyplace that the eight stations… that you’ll see, and you can step up to those. And we’ll just keep answering questions.
And we’ll break at 12 o’clock, and there will be food available down below, where you can also purchase things from us.
And we’ll reconvene about 12:45, and then we’ll stay until 3:30 and we’ll try and answer whatever questions you have. And then we will have to cut it off at 3:30.
We have… we had about the same number of ticket requests as in the past, but we had a different mix this year. We… as most of you know… we had change the venue, and the time, because Ak-Sar-Ben is winding down.
And so, there’s a little different rhythm to this meeting. A much higher percentage of our tickets than usual were requested by people from Omaha.
And, of course, you’ve heard me say before that we’re a little suspicious of these figures because we know that a lot of people claim to be from Omaha that aren’t, for status reasons, and so… we can’t really give you the geographical breakdown we normally would.
Introduction and Election of Berkshire’s Board of Directors
I’d like to introduce, first, our directors, and then we’ll proceed into the formal business of the meeting. On my left here is the ever-animated Charlie Munger, our vice chairman.
And if the other directors will stand up as I announce their names. We have the better voice in the movie, my wife, Susan Buffett. Susie?
We have Howard Buffett.
You can see we find these names in the phone book, I mean…
And Kim Chace. Kim?
Walter Scott, the star of “How to be a Gillionaire.”
And Ron Olson. Ron?
OK, we’ll now take on the formal part of the meeting.
We’re going to try to set a new record, I think, 5:38.4, but the four-minute mile has always been our ambition on this. So I will go through this and then we’ll get to the questions.
The meeting will now come to order. I’m Warren Buffett, chairman of the board of directors of this company.
I welcome you to this 2000 annual meeting of shareholders. I’ve introduced the directors. Also with us today are partners in the firm of Deloitte & Touche, our auditors. They are available to respond to appropriate questions you might have concerning their firm’s audit of the accounts of Berkshire.
Mr. Forrest Krutter is secretary of Berkshire. He will make a written record of the proceedings.
Miss Becki Amick has been appointed inspector of elections at this meeting. She will certify to the count of votes cast in the election for directors.
The named proxy holders for this meeting are Walter Scott Jr. and Marc D. Hamburg.
Does the secretary have a report of the number of Berkshire shares outstanding, entitled to vote, and represented at the meeting?
I do. Yes, I do. As indicated in the proxy statement that accompanied the notice of this meeting that was sent by first-class mail to all shareholders of record on March, 3, 2000, being the record date for this meeting, there are 1,341,174 shares of Class A Berkshire Hathaway common stock outstanding, with each share entitled to one vote on motions considered at the meeting, and 5,385,320 shares of Class B Berkshire Hathaway common stock outstanding, with each share entitled to 1/200th of one vote on motions considered at the meeting.
Of that number, 1,116,151 Class A shares and 4,342,959 Class B shares are represented at this meeting by proxies returned through Thursday evening, April 27th.
Thank you. That number represents a quorum and we will therefore directly proceed with the meeting.
The first order of business will be a reading of the minutes of the last meeting of shareholders. I recognize Mr. Walter Scott Jr., who will place a motion before the meeting.
Walter Scott Jr.:
I move that the reading of the minutes of the last meeting of the shareholders be dispensed with.
Do I hear a second?
Voice from Audience:
I second the motion.
The motion has moved and seconded. Are there any comments or questions? We will vote on this question by voice vote. All those in favor say, “Aye.”
Voice from Audience:
Opposed? You can signify by saying, “I’m leaving.” The motion is carried.
The one item of business of this meeting is to elect directors. If a shareholder is present who wishes to withdraw a proxy previously sent in and vote in person on the election of directors, he or she may do so.
Also, if any shareholder that is present has not turned in a proxy, and desires a ballot in order to vote in person, you may do so.
If you wish to do this, please identify yourself to the meeting officials in the aisles who will furnish a ballot for you. Would those persons desiring ballots please identify themselves, so that we may distribute them?
I now recognize Mr. Walter Scott Jr. to place a motion before the meeting, with respect to election of directors.
Walter Scott Jr.:
I move that Warren E. Buffett, Susan T. Buffett, Howard G. Buffett, Malcolm G. Chace, Charles T. Munger, Ronald L. Olson, and Walter Scott Jr. be elected as directors.
Is there a second?
Voice from Audience:
I second the vote.
It’s been moved and seconded that Warren E. Buffett, Susan T. Buffett, Howard G. Buffett, Malcolm G. Chace, Charles T. Munger, Ronald L. Olson, and Walter Scott Jr. be elected as directors.
Are there any other nominations? Is there any discussion? The nominations are ready to be acted upon. If there are any shareholders voting in person that should… they should now mark their ballots on the election of directors and allow the ballots to be delivered to the inspector of election.
Would the proxy holders please also submit to the inspector of elections a ballot on the election of directors voting the proxies, in accordance with instructions they have received? Miss Amick, when you are ready, you may give your report.
My report is ready. The ballot of the proxy holders, in response to proxies that were received through last Thursday evening, cast not less than 1,136,497 votes for each nominee.
That number far exceeds a majority of the number of the total votes related to all Class A and Class B shares outstanding.
The certification required by Delaware law of the precise count of the votes, including the additional votes to be cast by the proxy holders in response to proxies delivered at this meeting, as well as those cast in person at this meeting, if any, will be given to the secretary to be placed with the minutes of this meeting.
Thank you, Becki. Warren E. Buffett, Susan T. Buffett, Howard G. Buffett, Malcolm G. Chace, Charles T. Munger, Ronald L. Olson, and Walter Scott Jr. have been elected as directors.
Does anyone have any further business to come before this meeting before we adjourn? If not, I recognize Mr. Walter Scott Jr. to place a motion before the meeting.
Walter Scott Jr.:
I move that this meeting be adjourned.
Is there a second? A motion to adjourn has been made and seconded. We will vote by voice. Is there any discussion? If not, all in favor say, “Aye.”
Voice from Audience:
All opposed, “No.” This meeting’s adjourned. Thank you.
We will advise Guinness of those results, and maybe we’ll get in the book.
A Quick Announcement for those who will be attending the Baseball Game
Just want to make one more announcement and then we’ll start in the questions with area 1, which I believe will be right over here.
About… I think about 3,500 of you are attending the ballgame tonight. You know what you’re supposed to do, incidentally.
And we… in the past, we’ve had some traffic jams at… where the interstate goes off into 13th Street. So, the police, who are wonderfully cooperative throughout this whole weekend, in many ways, are going to do their darnedest to make sure that we don’t have much of a jam.
But if those of you who are attending the game would like to go a little early, that will probably be quite helpful.
And I might say that we have probably got… well, we think it’s probably the best zoo in the world here, thanks in very large part to our director, Walter Scott, and his wife Sue, who have really turned our zoo into a huge attraction, draws well over a million people a year.
It’s right adjacent to the ballpark. So if you get out a little early, and you want to go to the zoo, and then you won’t even have to move your car. You can come over to the ballpark, and then there’s also food there. And we have a… we serve Coca-Cola products.
And if you don’t all try to come at 6:45, it will be a help to us.
I will be pitching at 7:05, but my fastball will arrive at the plate almost instantaneously with the moment that it leaves my hand, so unless you’re there, you’ll miss it. And…
Q&A – Morning Session
(Click on a link below to skip to a particular topic)
- All Intelligent Investing is Value Investing.
- The stock market is a voting machine in the short run, in the long run it’s a weighing machine.
- How the Internet could hurt some of Berkshire’s subsidiaries.
- Even great businesses will have a bad year from time to time.
- How Warren thinks about risk.
- An update on the Unicover scandal that affected Gen Re. To read more about this scandal, click here.
- Rules and Fees of Warren’s earlier partnerships.
- Why American Express is not part of what Warren likes to call “the inevitables”.
- Berkshire won’t hold off on purchasing a great company just because it is currently losing money.
- Warren: “We will never buy anything we don’t think we understand”.
- Focus on what’s knowable and what’s important.
- Warren doesn’t think the general ownership of equities is going to be exciting over the next 10 or 15 years and would like to buy businesses.
- Berkshire’s dividend policy.
- Warren and Charlie’s criteria for selling a stock.
- Berkshire’s competitors “do all kinds of crazy things on compensation and everything else”.
- Look-through book value does not mean much at Berkshire.
- Markets produce “wild, wild things over time”.
- Will Berkshire’s newspaper interest be able to make the successful transformation to the new electronic world?
- Insurance is a commodity business.
- The importance of a sustainable competitive advantage or “moat”.
See’s new Barbie doll
At this moment, I think we have a small interruption in the program here.
Charlie, on your left.
It’s just a sample of what it’s like to be an officer at Berkshire.
This is the new See’s Barbie doll. And… never before seen, it will be in the exhibitors section, lower level.
And believe it or not, we’ve come up with three more just like this young woman. And they will be down there to take your orders.
We can’t ship them now, we won’t charge your credit card until they… until they’re available for shipment, which will probably be, I guess, around September or so.
But we wanted our shareholders to be the first ones to have a shot at this new product, and…
The model is not included in the… delivered price.
Q&A – Afternoon Session
(Click on a link below to skip to a particular topic)
- Most companies attempt to use the lowest figure they can when valuing stock options granted to employees.
- The moat around Moody’s and the operating company.
- The definition of a wonderful business.
- Would Warren consider investing in energy and transportation companies?
- Warren explains why he supported Doug Ivester’s (Coca-Cola CEO) big severance package.
- Warren admits he’s “no good on the macro questions”.
- You copy, very much, the people that you do look up to.
- Warren and Charlie would say no to running the federal reserve “in a hurry” and “quickly”.
- Warren’s philosophies and how he picks people.
- When Warren says he doesn’t understand a company, he means he “just don’t know the economics of it 10 years from now”.
- What will happen to Berkshire if Warren gets hit by a bus (or truck).
- Warren is not interested in buying the Omaha World-Herald newspaper.
- For society, the Internet is a wonderful thing, and for capitalists, it’s “probably a net negative”.
- Compensation in corporate America “will only ratchet upward”.
- Warren doesn’t think demographics means a thing when it comes to investing.
- The book that best represents Warren’s views.
- The original purchase of Berkshire was “a terrible mistake”.
- Warren would rather trust in the “intrinsic value of a bunch of really fine businesses run by good managers” than invest in gold.
- Warren consciously add float sometimes at a given cost.
- Charlie: “We don’t spend a lot of time thinking about things that will make, practically, no money”.
- What Warren and Charlie think about the EVA valuation methodology.
- How Warren met Bill Gates.
- Warren and Charlie share their thoughts on the US government’s antitrust case against Microsoft.
- Should Berkshire shareholders be concerned about the future prospects of GEICO?
- The long-term competitive advantages of MidAmerican Energy.
- Where will Berkshire invest the float from the insurance business?
- Warren’s general interest in the branded apparel companies “Liz Claiborne and Jones” and comment on the future of Freddie Mac.
- Anyone who succeeds Warren as Berkshire’s CEO won’t just be a caretaker of the company.
- The effects of inflation on the insurance businesses of Berkshire.
- In light of the recent trend of globalization, is Warren actively searching the global scene for investment opportunities?
- Berkshire is always looking for ways to create more than a dollar of value per dollar laid out.
- GEICO’s sustainable competitive advantage and the effects of the internet on pricing for the auto insurance industry.
- Warren shares his thoughts on the field of real estate.
- Berkshire Hathaway is an operating business that generates a lot of capital and uses that to buy other businesses, not a fund.
- Warren and Charlie don’t believe in buying into organizations to change them.
- Warren shares his broad view of Berkshire’s reinsurance business.
End of Q&A
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