Berkshire Gets Nod From SEC To Exclude Shareholder Proposals
02/21/2012| 11:11am US/Eastern
By Erik Holm
Securities regulators told Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB) in January they wouldn't object if the company excluded two corporate-governance proposals from its annual proxy this year.
The two proposals, submitted by a single individual last April, call for the company to fire employees for specific ethics violations and would require top Berkshire employees to sign off on any "high risk" corporate policies.
The proposals were sent to Berkshire for inclusion in this year's proxy less than a month after a top Berkshire executive, David Sokol, resigned amid questions about an investment he made in a company that Berkshire later agreed to buy.
Berkshire's outside law firm, Munger, Tolles & Olsen LLP, asked in a 13-page letter to the U.S. Securities and Exchange Commission that it be allowed to omit the proposals from the company's proxy materials.
The SEC said it would "not recommend enforcement action" if Berkshire omitted the proposals.
Such "no-action" letters are common this time of year, as companies prepare to answer to shareholders at their annual meetings. The SEC lists more than 100 sets of letters and supporting documents on its website to and from many of the largest U.S. companies so far this year, including financial firms like Goldman Sachs Group Inc. (>> Goldman Sachs Group, Inc.), J.P. Morgan Chase & Co. (>> JPMorgan Chase & Co.) and Bank of America Corp. (>> Bank of America Corp), and a host of other companies, including General Electric Co. (>> General Electric Company), Exxon Mobil Corp. (>> Exxon Mobil Corporation), and Coca-Cola Co. (>> The Coca-Cola Company).
The individual who submitted the proposals to Berkshire, Joseph Maslin, wrote in his letter outlining his ideas that he copied his first one, concerning ethics violations, from the Goldman Sachs proxy statement. The second calls for Buffett and "other top officials and the Board of Directors...to sign-off [by] means of an electronic key, daily or weekly, that they have observed and approve or disapprove of figures and policies that show a high risk condition for the company, caused by those policies."
The letter from Berkshire's law firm spent about seven pages outlining reasons why it felt the first proposal should be excluded from the proxy.
The letter notes that the proposal lifted its wording from a section of Goldman's proxy discussing executive compensation, not from a shareholder proposal. Berkshire, the letter said, "does not have employment agreements or an executive compensation plan remotely similar to Goldman Sachs."
It described the second proposal as "hopelessly confusing and misplaced."
-By Erik Holm, Dow Jones Newswires; 212-416-2892; firstname.lastname@example.org
-Liz Moyer contributed to this article.