Buffett: 'No Desire to Go to War with Coca-Cola'

Buffett: 'No Desire to Go to War with Coca-Cola'
Chris Goodney/Bloomberg via Getty Images Billionaire investor Warren Buffett
By Alex Crippen

Warren Buffett said he abstained in Coca-Cola's shareholder vote on a controversial pay plan because he had "no desire to go to war" with the company, even though he disliked the plan.

Buffett, however, said the plan may be changed before it is implemented, so that it is no longer "excessive." Coke's management, he said, will do "what's right."

Buffett expressed his concerns to CEO Muhtar Kent before the vote and went public on CNBC with his criticism just after Coke announced the plan had won approval of 83 percent of shares voted.

He said it should be "no surprise" to people that corporate boards are "clubby" and partially "social organizations." "There's a great tendency to act in a socially acceptable way instead of a business maximizing way."

Buffett pointed out that many board members are very well paid and are hoping to be invited onto other boards as well. Raising objections makes them less attractive to other companies. "That's the real world."

Buffett added that you can get things done without getting into a fight, and that's true outside the board room as well.

Buffett's reluctance to vote against the plan has been criticized by some advocates of corporate governance reform, including activist investor Carl Icahn.

Berkshire Hathaway (BRK-A) (BRK-B) holds 400 million Coke (KO) shares, about 9 percent of the company's shares outstanding. It's worth about $16.4 billion.

Buffett's comments echoed what he told roughly 38,000 shareholders at this weekend's annual meeting.

Buffett appeared live from Omaha with Becky Quick on CNBC's "Squawk Box" following the meeting.

Berkshire also has a $1.4 billion stake in General Motors (GM). Buffett endorsed CEO Mary Barra's handling of the automaker's recall controversy. She's in a "hotseat," he said, "but not a hotseat of her own making."

He said Bank of America's accounting error when calculating losses from its acquisition of Merrill Lynch in 2009 didn't worry him very much. CEO Brian Moynihan is "doing a terrific job." The bank "has a wonderful deposit franchise and it will do well over time."

Berkshire has a multibillion dollar investment in Bank of America (BAC).

Buffett repeated his desire to do another big deal with Brazil's 3G. Berkshire Hathaway's partner in last year's $23 billion purchase of Heinz. He said that deal is going well.

Asked if he's "cooking" up anything with 3G, Buffett said 3G's Jorge Paulo "does the cooking. I do the tasting." One thing the two companies won't do, he said, is launch a hostile takeover.

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"Buffett, however, said the plan may be changed before it is implemented, so that it is no longer "excessive." Coke's management, he said, will do "what's right.""

Translation: Buffet, however, said that the vote was superfluous as the Coke management will only go the Berkshire way.

May 05 2014 at 12:59 PM Report abuse rate up rate down Reply