Berkshire Hathaway 2008 Annual Meeting Transcript
Transcript of the 2008 Berkshire Hathaway Annual Meeting held on May 3, 2008 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)
Warren has struck a deal to trade jobs with daytime soap opera diva Susan Lucci
Folks, this just in. It appears that Warren Buffett has struck a deal to trade jobs with daytime soap opera diva Susan Lucci.
Buffett has reportedly negotiated a permanent spot on the cast of All My Children. Apparently, Ms. Lucci is en route to Omaha as the new CEO of Berkshire.
Where could he be?
Do you mean Warren, Charlie? He’s been detained at the TV studio.
Hi, Charlie. I’m Susan Lucci. Oh, haven’t you heard about the deal between Warren and me?
He’s going to be a big star in All My Children, and I’m going to be taking over Berkshire Hathaway.
Well, you’ve certainly got some important qualities that Warren lacks.
Well, thank you, Charlie. And you can relax now, you dear man. You just make yourself at home because I’ll take it from here, thank you.
I’ve been wanting to talk to our shareholders for quite some time now. There’s some changes I really think we need to make around here.
The first thing we need to look at is our dividend policy.
I have never heard of anything so cheap and so unfair to our wonderful shareholders. We need to change it.
Sounds good to me.
And, second, we need to look at giving guidance on earnings. And we need to do that every single week.
Sounds good to me.
And, third, we need to pay our directors more than $900 a year.
Just one minute.
Hi, Warren. Warren, I thought you were at the All My Children studio.
What’s that talk about dividends that I hear?
Oh, nothing important, Warren. You just concentrate on your role on the show.
Susan, my show is Berkshire Hathaway. And my role is to run it.
Warren, you can’t do that.
I just did it. All My Children can’t do without you, and I can’t do without Berkshire.
Oh, Warren. So you mean the deal is off?
The deal is off. I really want to thank you. You’ve brought me to my senses. You can go back to All My Children. I’ll stay here at Berkshire.
But I am so grateful to you Susan, that I want you to go out to Berkshire… not to Berkshire… to Borsheims and I want you to pick out anything you would like, and charge it to Charlie.
Oh, Warren, you are darling. Thank you.
(To Charlie) And you’re a darling, too.
Now, wait a second.
OK. Charlie, let’s get this show on the road.
The… she spent more time with him than she did with me, but…
The… we’re going to follow the usual procedure.
The business meeting will start at 3:15. But between now and then, with a break for lunch, we’re going to answer your questions. We don’t screen them ahead of time, as you know… based on who gets lined up at the microphone first.
And we’ll go around from sections to sections and then go to the overflow rooms. My understanding is that our best estimate is that we have about 31,000 people here today.
Somewhere I have a map here. Marc, do we have that?
Pardon me? Can’t hear a thing up here. But in any event… on the yellow pad. OK. We’ll just mark them off as we go along.
The… I would like, before we start… I heard Ron Olson laughing there. I think he made it. I’m glad to hear it.
Warren introduces Berkshire’s board of directors
Let me introduce our directors. I really wasn’t sure whether to go through with this part of the show after they showed that rousing applause for things like dividends and raising their… but we have up here… we have Charlie Munger on my left. He’s the one that can hear; I can see.
We work together for that reason.
And if the rest of you will just stand as I give your name. And if you’ll hold your applause to the end… or even longer if you would like… I will introduce them.
It’s Howard Buffett, Susan Decker, Bill Gates, David Gottesman, Charlotte Guyman, Don Keough, Tom Murphy, Ron Olson, and Walter Scott. The best directors in America.
Charlie and I will take a break at noon because we will probably, by that time, have finished all of the things we have up here to eat, and we’ll need to have lunch.
I’d appreciate it if you would limit your questions to one question, and that means not embodying a three-parter or a four-parter or something like that.
And there’s no need to make a long introductory statement because we’ll get more questions answered that way, and we want to cover as many people as we can.
Q&A – Morning Session
(Click on a link below to skip to a particular topic)
- How to have the correct investor mindset.
- Warren will take responsibility for Cologne Re’s investment portfolio.
- There has never been a director’s meeting in Berkshire where the subject is where the stock market will be going.
- How Berkshire got to have some of the greatest managers.
- If you want to buy or sell a stock, you should just buy or sell the stock.
- Warren thinks people like his sister Doris are the “real charitable people”.
- In Berkshire, managers of subsidiaries run the business independently with no interference from headquarters.
- ISCAR is building a plant in China mainly to serve the Chinese market.
- The returns from owning Berkshire will be less than they have been in the past.
- PacifiCorp, as a public utility, will do as the public policy requires with regards to the Klamath river dam.
- How Warren maintains his mental and physical health.
- Find your passion and do what you love.
- The ability to communicate, both in writing and orally, is of enormous importance.
- There are trade-offs involved in government policy.
- Warren explains the pair trading strategy he used to employ when he was managing his partnership.
- When there are market dislocations, there are always ways to take advantage of it.
- You can’t build a great business in one day or one week.
- If Warren could only look at the financial statements of a company, what metric would he look for when trying to decide whether he should buy the company or not?
- In a large society with competing ideas and desires, it’s up to the government to sort things out.
- What a 12-year-old should be reading.
- What Warren looks for when evaluating a business.
- How Warren would hedge the risk of the US dollar declining in value.
- Alternative investment options when investing small amounts of money.
- Warren and Charlie shares their thoughts on the supposed lack of profound understanding of economics of the three presidential candidates.
- Warren gives an update on the succession plan at Berkshire.
- Charlie: People who say the whole secret of investment is diversification got it exactly “back-ass-ward”.
- On Berkshire Hathaway supposedly being one of the most troublesome advertisers.
- It’s better to look at one’s overall financial condition and not worry about where the location of the assets will be.
- The future of the world’s energy resources.
- What policies would Warren implement if he was elected president?
- Charlie thinks the policy of turning American corn into motor fuel was a “dumb idea”.
- For a non-full time investor with money to invest, the best investment option is a very low cost index fund.
- If you live within your income, you’ll have a lot more income later on.
It’s noon now. We’ll take about a 30 to 40-minute break. We’ll come back. Some of those who are in the other room… we always have some openings here after lunch so you might be able to move into the main room.
We’ll reconvene, we’ll say, at 12:45. We’ll go to 3 o’clock.
No more questions regarding the Klamath situation
OK. We’re going to go back to work here. We broke off at area seven last time.
I have asked… just so everybody’s aware of it… we’ve had three questions relating to the Klamath situation, and I think that’s more than proportional to the interest of the crowd.
So we’ll skip any more like that. I think the position is known.
Q&A – Afternoon Session
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- The business practices of investment banks have become so complex that it is not possible for the head of one to be aware of the day-to-day or week-to-week exposures.
- How Warren was able to invest large amounts of money in a company without conducting “due diligence”.
- Warren: I’m an agnostic.
- It is unlikely that Berkshire will be taken over and broken up once Warren is no longer around.
- The economic characteristics of Kraft that made it a good business.
- Criteria for evaluating the investment professionals who will eventually manage Berkshire’s portfolio.
- How Warren is able to make a decision quickly and decisively when making investment decisions.
- Warren and Charlie has nothing much to say about Carlos Slim.
- It’s a mistake to start deciding which countries can, and which countries can’t, participate in the Olympics.
- The future trend of coal.
- Don’t make a categorical decision of where to invest.
- The primary problem of mankind.
- Warren and Charlie’s advice for young people.
- The economics of owning a sports team.
- The United States is so rich that the consequences of not saving may not be apparent.
- Warren is going to Germany to be “on the radar screens” of family owners of German businesses.
- The then current economic stresses “had more of its origins in the mortgage field and in terms of the residential real estate bubble”.
- How to properly value the assets of major financial institutions.
- A shareholder’s plea for the audience to read a certain chapter of the US constitution.
- The future of mass transit.
- Charlie agrees with Al Gore but for a different reason.
- Warren and Charlie have differing opinions on whether credit default swaps could cause a crisis in the financial markets. To learn what a credit default swap is, click here.
- Why Berkshire is still not paying dividends.
- Is the corridor for electricity coming in from Arizona into California or the other way around?
- The prospects of Berkshire investing in India or China in the near future.
- Who Warren and Charlie considered their best teachers.
- Common shareholders can’t do much to influence a company’s compensation system.
- Warren thinks the pharmaceutical industry, as a whole, will do well over time.
- Why Berkshire divested its shares in PetroChina.
- Warren and Charlie’s fondest hope for Berkshire.
End of Q&A
The… now what we’ll do is we’ll just break for five or so minutes, and then we’ll reconvene and have the formal business meeting.
After that, at 4 o’clock, for the international visitors, those from outside of North America, we will… Charlie and I… will meet with them personally.
And I thank you all for coming. I hope you come back next year and bring your friends. Thank you.
Start of formal business meeting
… appropriate questions you may have concerning their firm’s audit or the accounts at Berkshire.
Mr. Forrest Krutter, our secretary at 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 and Marc Hamburg.
Does the secretary have a report of the number of Berkshire shares outstanding, entitled to vote, and representative at the meeting?
Yes, I do. As indicated in the proxy statement that accompanied the notice of this meeting that was sent to all shareholders of record on March 5, 2008, being the record date for this meeting, there 1,081,013 shares of Class A Berkshire Hathaway common stock outstanding with each share entitled to one vote on motions considered at the meeting, and 14,033,343 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, 883,428 Class A shares and 10,921,716 Class B shares are represented at this meeting by proxies returned through Thursday evening, May 1.
Thank you. That number represents a quorum, and we’ll therefore directly proceed with the meeting.
First order of business will be a reading of the minutes of the last meeting of shareholders. I recognize Mr. Walter Scott who will place a motion before the meeting.
I move that the reading of the minutes of the last meeting of the shareholders be dispensed with and the minutes be approved.
Do I hear a second?
Barely, I hear a second. The motion has been moved and seconded. Are there any comments or questions? We will vote on this motion by voice vote. All those in favor say “aye.”
Voice from Audience:
Opposed? The motion is carried.
Election of Berkshire’s board of directors
First item of business is to elect directors.
If a shareholder is present and 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 shareholders are present who 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 meeting officials in the aisles who will furnish a ballot to you. Would those persons desiring ballots please identify themselves so that we may distribute them.
I now recognize Mr. Walter Scott to place a motion before the meeting with respect to election of directors.
I move that Warren Buffett, Charles Munger, Howard Buffett, Susan Decker, William Gates, David Gottesman, Charlotte Guyman, Don Keough, Tom Murphy, Ron Olson, and Walter Scott be elected as directors.
Is there a second to the motion? Somebody second the motion.
Voice from Audience:
OK. It has been moved and seconded that Warren Buffett, Charles Munger, Howard Buffett, Susan Decker, William Gates, David Gottesman, Charlotte Guyman, Don Keough, Thomas Murphy, Ronald Olson, Walter Scott be elected as directors.
Are there any other nomination? Is there any discussion? The nominations are ready to be voted upon.
If there are any shareholders voting in person, they should now mark their ballots on the election of directors and allow the ballots to be delivered to the inspector of elections.
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 the instructions they’ve received.
Miss Amick, when you’re 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 935,155 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 any cast in person at this meeting, will be given to the secretary to be placed with the minutes of this meeting.
Thank you, Miss Amick. Warren Buffett, Charles Munger, Howard Buffett, Susan Decker, William Gates, David Gottesman, Charlotte Guyman, Donald Keogh, Tom Murphy, Ronald Olson, Walter Scott have been elected as directors.
End of formal business meeting
Does anyone have any further business to come before this meeting before we adjourn?
If not, I recognize Mr. Scott to place a motion before the meeting.
I move this meeting be adjourned.
Is there a second?
Voice from Audience:
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:
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