Warren Buffett Criticizes Coke; Not Surprised By IBM [FULL INTERVIEW]

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Warren Buffett: Stocks not too frothy

CNBC’s Becky Quick discusses Warren Buffett’s feelings about the market. Full interview below (the full interview with Bloomberg can also be found below).

CEOs terrified of activists: Buffett

Warren Buffett discusses activist investing and shares his thoughts on David Winters and Bill Ackman.

Warren Buffett: Coke equity plan excessive

CNBC’s Becky Quick speaks with Warren Buffett about why he abstained in his vote on Coke shareholder equity plan. The package was excessive, he says.

Warren Buffett: Not surprised by IBM

CNBC’s Becky Quick speaks with Warren Buffett about his position in IBM after its disappointing earnings report. I’ve bought stock this year and have never sold a share, Buffett said.


david winters, what do you thinkof david winters because oneperson this morning actuallycalled him a gadfly?is he evelyn y. davis. he’s not a gadfly.i think he’s owned the stock formany years.incidentally, we heard from manyshareholders, that owned largeblocks and i don’t know how theyvoted. coca-cola shareholders. and, i mean, that’s an issuethat shareholders should vote onand you’re expected to cast yourvote on the issue.i disagreed.i didn’t vote against it.i abstained, but it’s aperfectly proper thing.if you’re going to give awayyour part of the company.shareholders should probablyvote on it. we’ve seen activist investorstake all kinds of new pages andcreate new play books andvaliant to go after allegen.he said he’s heard from anothercompany to target what theywould like him to help out with,too.does any of that strike you asstrange?does it seem like fair behavioror front running? i don’t know the arrangementthat he had. he and valiant got together. valiant put some money intothis deal with them.they agreed to go after ittogether and then they boughtthe stake of the 9.7%, 9.6%. my guess is he had legaladvice on it. he did. robert koizami thought it wasfine except valiant can’t buythat big of a stake in anothermaker.there were other limitationsdown the stock that they couldbuy. i don’t know the answer tothat. does it strike you thatactivists are getting strongerand stronger? the ceos are terrified ofactivists.i can tell you that.they are all talking toinvestment bankers and lawyersand saying what do we do aboutthis? who is in the right, or is ittough to paint all activistinvestors with one brush? i don’t think you cangeneralize about it.i think there are companieswhere management has not done agood job and i’m not referringto anything specific here, but,i mean, certainly if people wantto step up and buy a lot ofstock in the company, it’s hardto argue with their right to dothat. there have been major dowcomponents that have beenmentioned as potential takeovertargets, even in ibm, somepeople have suggested.do you think that would be tothe good of shareholders or tothe detriment? i think it would be case bycase.i’m not looking for anybody todo that in ibm.


let me ask you about another stock that you own, ibm. right. that company came out with a disappointing earnings report. revenue was down for another quarter and that surprised the street. some people have suggested, and there’s rumored floating around, that you have soured on the stock, have you? that’s not true, no. i’ve actually bought a few shares this year. you’ve bought stock and ibm. i’ve never sold a share. since the earnings report that came out. not since the earnings report. the earnings report should not have been a surprise. it was actually ruffly what they said in the earnings call. revenues were down 2% i think on a constant currency basis, and i expected, that and i don’t think they said anything different. they said earlier they expected to earn about 250. they signaled the charge they were going to make ahead of time for layoffs essentially, so i — it did not strike me as a big surprise what they reported. now, maybe a surprise a year from now or two years from now, but i’ve not been surprised by what they reported. would you buy additional shares of ibm? would you continue to buy? depends on the price. the price today i think is trading right around 191.63 on the last trade. i think your average cost was somewhere closer to $173. i look back and the annual report i think you’ve seen of about 12%. bought it at around a cost of $11.86 billion, now closer to $13.05 billion. we could buy it, but, i mean, i don’t announce anything that we’re going to buy or sell, but i — i wouldn’t rule it out. i paid that much for the stock.

Warren Buffett abstained on Coke vote

CNBC’s Becky Quick speaks with Warren Buffett about why he abstained from voting on Coca-Cola’s executive-compensation plan and responds to activist investor David Winters criticism. “We didn’t disapprove of management, but we did disapprove of the plan,” Buffett said.


warren buffett has just had lunch with the winners of the annual glide foundation auction. this is an auction that went off last year. this was the 14th annual auction. you have now raised $15.6 million for the glide foundation. i know that the new auction goes up on june 1st. right. looking for next year. how was lunch this year? lunch was great. i always have a good time, and i knew a couple of them from before. they are all going to come to the annual meeting. it’s a treat for me. they didn’t want to be identified, but they snuck out of here despite all the media here this time. yeah. they weren’t looking for publicity, but we had a very good time. okay. glad to hear t.while you were in there there was a little bit of news happening out here. we’ve been hearing about the coke shareholders meeting. turns out votes are in. 83% of shareholders voted in favor of coke’s plan, the compensation, the equity plan. that means 17% voted no. how did you vote your shares? we abstained so that would have been 9%, i don’t know whether that gets — whether they took that out before calculating the 83 and 17 but we abstained. that was 83% of the votes that were cast. why did you abstain? well, we abstained because i didn’t want to express any disapproval of management. did you we did disapprove of the plan. the plan compared to past plans was a significant change, and there’s already a 9% or so overhang in terms of options outstanding relative to the amount of shares outstanding, 8% 209%, and there’s authorization of another 500 million shares, not all of which would have gone on options. that’s 11% of the conditions and i thought it was too much, and i thought that my partner thought it was too much so we abstained. your math, does it match up with david winters who has been the activist that’s vocal about this. he thinks it would be a did i lufgs 16% to existing shareholders that are really there. mukhtar kent has said he thinks like it’s 1%. closer to the one — in terms of dilution because they would repurchase — they would use the proceeds they received on the option to repurchase shares, so they said the breakdown between giving performance shares in terms of what they call option equivalent would be 40% that and 60% options. if they repurchased the shares, it would not be as low as 1%, but it would be far from the higher numbers. david winters was just out with a statement and i guess he jumped the gun a little bit because he criticized you and said we’re surprise that had warren buffett had the opportunity to take a stand against excessive management compensation and failed to seize it. why are you telling us now? i did not want to be in a position of campaigning for either side. we were going to cast our vote, it would become known how we would cast our vote and i have enormous respect for mukhtar kent. he’s man to be running coca-cola. i respect the coke organization. i just don’t like the plan. did you talk to mukhtar kent about your thoughts on this? i did, but it was only after the proxy was out? he did not know my views ahead of time. your son is on the board of coca-cola. i’ve been on boards for 55 years, and 19 public boards, and i’ve never heard of a vote against a compensation plan brought in by the compensation committee. what happens in a board. some have the mistaken noigs notion of how boards act. the compensation committee and comes in and works for a few hours or day and have had conultants and i’ve never yet heard any of the 19 boards that i was on, anybody in the meeting say they were against it, and i said outside of the meeting, taking on the committee that’s reported, and taking them on is a little bit like belching at the dinner table. you can’t do it too often. if you do you find the eating in your kitchen. did you ever vote for something on a board that you disagreed with? sure. i voted for compensation plans i haven’t agreed with. i’ve even sort of muttered a yes on some mergers that i didn’t think makes any sense. it happens. i’m still trying to get my head around this. you went ahead and abstained the votes on this, but did you look at this compensation plan, or did you look at the equity plan before david winters pointed it out? i — i read the full details actually after — after that. i just hadn’t read the material yet, but in 2002 coke had a plan that involved 240 million shares. that lasted six years. they had a plan in 2008, six years later, that was 280 million shares, and that lasted six years, and then this plan when i read about it was for 500 million shares which they would equate to 340 million, but still 340 or 500 and they were going to use, it they said, in four years, and that really struck me as quite excessive, so i — i didn’t actually read that when winters wrote the letter, but i would have felt the same way

Buffett: I Could Never Vote Against Coca-Cola

Warren Buffett, the billionaire chairman of Berkshire Hathaway, explains why he abstained from voting on Coca-Cola Co.’s plan to award employees with stock. He speaks with Betty Liu on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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