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Berkshire Hathaway Board Restructures Amid New Governance Policies
Berkshire Hathaway announced on Friday that Ronald Olson, a long-serving director, will depart from the board following a recent policy change mandating that directors, with the exception of Warren Buffett, retire upon reaching the age of 80.
In a proxy statement released ahead of its annual meeting scheduled for May 3 in Omaha, Nebraska, the company also revealed that its board unanimously recommended the rejection of seven shareholder proposals. Notably, three of these proposals pertain to enhancing diversity and anti-discrimination initiatives within its subsidiaries.
Warren Buffett’s compensation for the year 2024 was reported at $405,111, which includes his standard salary of $100,000 along with expenses for personal and home security. In contrast, Vice Chairman Greg Abel and Vice Chairman Ajit Jain each saw their remuneration increase by $1 million, bringing their total compensation to $21 million each.
At 62 years old, Abel is in charge of overseeing Berkshire’s non-insurance operations, including major entities such as the BNSF railroad and Berkshire Hathaway Energy. Jain, who is 73, is responsible for the insurance sector, which includes the well-known Geico car insurance.
Olson, now 83, has been a member of Berkshire’s board since 1997 and is a partner at the law firm Munger, Tolles & Olson. His departure comes as a result of a new age limit imposed in the company’s corporate governance guidelines, which affects all directors except Buffett, who is 94. Currently, all other board members are 75 or younger.
Although Olson’s resignation is notable, it comes as Buffett’s standing remains secure due to his significant control over Berkshire’s voting power, holding 30.3% of it. This control grants him an exemption from the age limit for directors, under provisions that apply to those holding at least 5% voting rights. Buffett is also the owner of approximately 14.4% of Berkshire’s stock and may remain on the board after retirement if independent directors choose to keep him on.
The shareholder proposals submitted include calls from conservative investors for Berkshire to disclose how its business practices impact employees relative to various demographic factors such as race, religion, and gender, among others. The board characterized these requests as unnecessary, asserting that each subsidiary operates under its own guidelines, with Berkshire’s fundamental approach being adherence to laws and ethical conduct.
Additionally, the board opposed a motion to establish a committee specifically for overseeing diversity and inclusion, indicating that such matters are already within the purview of the existing audit committee. A proposal advocating for independent oversight of risks related to artificial intelligence was also deemed unnecessary and contrary to Berkshire’s decentralized organizational culture.
Source
finance.yahoo.com