US's Warren Buffett attacks executive greed

May 05, 2003 - London Times
US sage attacks executive greed
From Abigail Rayner in Omaha, Nebraska

WARREN BUFFETT, the US investor whose folksy style masks one of the shrewdest minds in corporate America, used the annual gathering of his Berkshire Hathaway vehicle to launch a fierce attack on US executive greed and President Bush's planned tax cuts.

The shareholder meeting in Mr Buffett's home town of Omaha, Nebraska, which attracts some 14,000 "Buffeteers", is dubbed the "Woodstock for Capitalists" and is a fixture in the investment calendar. But this year's gathering at times seemed more like an antiglobalisation rally.

The second richest man in the world, Mr Buffett, known as the "Sage of Omaha", criticised plans for tax cuts that he said were designed to fleece the poor and reward the rich.

"I am not for the Bush plan. It screams of injustice. The main beneficiaries will be people like me and Charlie," he said, referring to the Berkshire Hathaway vice-chairman Charlie Munger. Mr Buffett said the tax plan was equivalent to "us giving a lesser percentage of our incomes to Washington than the people working in our shoe factories".

He called on investors to rise up and revolt over colossal executive pay packages, saying in the past 20 years there had been "an enormous disparity in the rates of compensation between people at the top and people at the bottom, and a disconnect between people at the top and the shareowners who give them the money".

"Arise shareholders," he concluded, raising both palms skyward. Famed for his integrity and modest lifestyle, Mr Buffett paid himself $100,000 (£62,000) in salary and a further $300,000 in bonuses last year. He still lives in the grey stucco house he bought in 1956 for $31,500.

Berkshire Hathaway, the insurance-to-candy conglomerate that he chairs, would report record operating profits of $1.7 billion in the first quarter, benefiting from the strength of the insurance sector, he said. This was double the $818 million reported for the first three months of 2001.

Mr Buffett reported a "soft" performance of Berkshire's consumer businesses, citing weak consumer spending power, which he claimed was not fairly reflected in the figures for US gross domestic product.

Mr Buffett said Berkshire had accumulated investible cash ?- or "float" ?- of $42.5 billion, up from about $37 billion a year ago. The conglomerate owns a diverse range of companies including Geico, the sixth largest auto insurer in the US, and General Re, a leading reinsurer. Last Friday the company announced plans to buy McLane, a wholesale grocery distributor owned by Wal-Mart, for $1.5 billion.

When asked about the increase in dubious litigation in the US, Mr Buffett acknowledged the problem but seemed more concerned about the growing number of plaintiffs with a genuine grievance against a US corporation.