Buffett Says Salomon Has Been Ordeal
Berkshire Hathaway Chairman and super-investor Warren E. Buffett said Monday that if he “knew it would take so many months of my life and enjoyment,” he would not have invested in Salomon Inc.
Buffett is rumored to be negotiating with the Securities and Exchange Commission on proposed sanctions against the Wall Street firm. However, he told 2,600 shareholders attending the firm’s annual meeting that he was enjoined from discussing Salomon’s legal affairs.
Buffett became interim chairman of Salomon last August after a securities trading scandal toppled the firm’s leaders. Berkshire, a conglomerate through which Buffett has made many of his legendary stock investments, owns a sizable stake of Salomon preferred shares that are convertible into common stock.
Buffett and Vice Chairman Charles T. Munger, a Los Angeles businessman, blasted the accounting profession for its refusal to value stock options going to top corporate officers or to reflect the cost of options to corporations.
Munger called the omission “weak, corrupt and contemptible.” Several chief executives of companies in which Berkshire holds sizable investments have been criticized for excessive pay, including Coca-Cola Chairman Roberto C. Goizueta and Champion International Chairman Andrew Sigler.
Said Buffett: “It’s disgusting that 30 years ago the accounting profession said it was too hard to value options, so they would ignore them. That has cost shareholders money.”
On another simmering issue regarding corporate governance, Buffett suggested that the biggest problem with board of directors’ oversight is not removing crooked or inept chief executives but getting rid of “mediocre performers.”
“The CEO is the only person in a company who doesn’t get measured,” he said. “I’ve been on 30 boards, and I’ve never seen an agenda that had on it evaluation of a chairman for sub-par performance.”
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