Shareholder adviser ISS recommends investors not vote four directors of Warren Buffett’s Berkshire Hathaway to reprimand the company’s executive compensation policies.
Refusal to support the re-election of four members of Berkshire’s compensation committee reflects concern over the salary plans for Vice Presidents Greg Abel and Ajit Jain, who ISS say earn some of the highest base salaries of all executives of US public companies.
Several large fund managers are already planning to withhold director votes on the company’s governance and audit committees at Berkshire’s annual meeting in May.
The moves are the biggest sign to date of investor concern over the governance of the sprawling Buffett conglomerate, whose stakes include insurer Geico, the BNSF railroad and electric utilities across the states. United States, among many others.
Abel and Jain were positioned as the first two to one day succeed Buffett as CEO. The pair have earned a base salary of $ 16 million in each of the past three years, with bonuses and other perks swelling the figure above $ 19 million in 2019 and 2020.
“We still do not know if part of [executive] compensation is linked to the performance of the company, ”said ISS. “The persistent lack of transparency raises concerns about whether the remuneration committee is providing adequate oversight.”
ISS disclosed its recommendations to investors on Friday, saying they should withhold votes from Susan Decker, David Gottesman, Walter Scott Jr and Meryl Witmer, who make up the compensation committee.
In the past six years, ISS has only recommended a voting suspension once – in 2019 for Scott, again due to executive compensation issues.
Separately, Berkshire is in a battle over two shareholder proposals that would require it to disclose the work it does to tackle climate change, diversity and inclusion in its workforce. 360,000 people. Berkshire urged investors to reject both proposals, drawing criticism.
California pension fund Calpers and asset manager Neuberger Berman have both said they plan to vote for both proposals and will vote against four directors on Berkshire’s governance committee, which has the same makeup as the remuneration committee. Calpers also plans to withhold votes from the directors of the Berkshire audit committee.
Calpers said he came to the decision as Berkshire “failed to provide accurate and timely disclosure of environmental risks and opportunities, such as those associated with climate change.”
“As a country and as a company, we are at an inflection point and that is reflected in the investment community,” said Cathy Seifert, analyst covering the company at CFRA Research. “Unfortunately, Berkshire does not seem willing to board this train leaving the station.”
Glass Lewis, the second-largest proxy adviser, advised Berkshire investors not to back board member Thomas Murphy, highlighting concerns about the company’s climate change disclosures.
Through its holdings, Berkshire Hathaway had “significant exposure to climate-related impacts and regulations,” said Glass Lewis, adding that “shareholders should voice their dissatisfaction” with the board’s efforts on climate change.
Berkshire did not respond to a request for comment.
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