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MarketScreener Homepage  >  Equities  >  Nasdaq  >  The Kraft Heinz Company    KHC

THE KRAFT HEINZ COMPANY

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Buffett calls for more accountability for corporate directors

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02/23/2020 | 07:13pm EDT
Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc's annual shareholder meeting in Omaha

Warren Buffett on Saturday called on corporate America to make their boards of directors more accountable to shareholders and less beholden to chief executive officers, perhaps by reducing their pay and requiring that they buy more stock.

In his annual letter to Berkshire Hathaway Inc shareholders, Buffett said pay for outside directors has "soared" to levels that might threaten their independence, sometimes reaching $250,000 to $300,000 for two weeks work, while "generous" age limits ensure "fabulous" job security.

Buffett said this can make even "independent" directors resist challenging bad decisions by CEOs, especially in takeovers.

"When seeking directors, CEOs don't look for pit bulls," Buffett wrote. "It's the cocker spaniel that gets taken home."

He said one large American company he did not identify recently had eight directors who never bought its shares with their own money.

"I feel better when directors of our portfolio companies have had the experience of purchasing shares with their savings, rather than simply having been the recipients of grants," Buffett wrote.

Berkshire has more than 90 operating units such as the BNSF railroad, Geico auto insurer, and Dairy Queen ice cream.

Its own 14-person board is no paragon of youth, with six directors -- including the 89-year-old Buffett -- over age 70 and three in their 90s.

And the voting influence of most Berkshire directors is limited because Buffett, considered by many among the world's greatest investors, controls nearly one-third of the voting power despite owning only about one-sixth of Berkshire's stock.

Still, no Berkshire director was paid more than $7,300 for their work at the company in 2018, a regulatory filing shows, though several including Buffett and Microsoft Corp co-founder Bill Gates are billionaires, and can afford it.

Buffett also said adding women to boards "remains a work in progress." Three Berkshire directors are women.

Buffett said he has been a director at 21 publicly-traded companies including Coca-Cola Co, Kraft Heinz Co and Washington Post Co, and in all but two "represented a substantial holding of stock."

He has given up all directorships apart from Berkshire, one of several moves in recent years to reduce his workload.

By Jonathan Stempel

Stocks mentioned in the article
ChangeLast1st jan.
BERKSHIRE HATHAWAY INC. -0.74% 272000 Delayed Quote.-19.90%
MICROSOFT CORPORATION -1.57% 157.71 Delayed Quote.0.01%
THE KRAFT HEINZ COMPANY -1.71% 24.74 Delayed Quote.-23.00%
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Financials (USD)
Sales 2020 24 292 M
EBIT 2020 4 500 M
Net income 2020 2 733 M
Debt 2020 26 508 M
Yield 2020 6,35%
P/E ratio 2020 11,1x
P/E ratio 2021 10,7x
EV / Sales2020 2,34x
EV / Sales2021 2,29x
Capitalization 30 226 M
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Mean consensus HOLD
Number of Analysts 21
Average target price 27,83  $
Last Close Price 24,74  $
Spread / Highest target 94,0%
Spread / Average Target 12,5%
Spread / Lowest Target -31,3%
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Managers
NameTitle
Miguel Patricio Chief Executive Officer
Alexandre Behring da Costa Chairman
Flavio Torres Head-Global Operations
Paulo Basilio Global Chief Financial Officer
Gregory Edward Abel Independent Director
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