Warren Buffett’s 2008 letter to shareholders was another classic piece of writing by the best investor we have ever seen. However, I was very surprised when I got to this part of the letter (the text in bold is my emphasis):
This year we will be making important changes in how we handle the meeting’s question periods. In recent years, we have received only a handful of questions directly related to Berkshire and its operations. Last year there were practically none. So we need to steer the discussion back to Berkshire’s businesses.
In our first change, several financial journalists from organizations representing newspapers,
magazines and television will participate in the question-and-answer period, asking Charlie and me questions that shareholders have submitted by e-mail. The journalists and their e-mail addresses are: Carol Loomis, of Fortune, who may be emailed at cloomis@fortunemail.com; Becky Quick, of CNBC, at BerkshireQuestions@cnbc.com, and Andrew Ross Sorkin, of The New York Times, at arsorkin@nytimes.com. From the questions submitted, each journalist will choose the dozen or so he or she decides are the most interesting and important. (In your e-mail, let the journalist know if you would like your name mentioned if your question is selected.)
Neither Charlie nor I will get so much as a clue about the questions to be asked. We know the
journalists will pick some tough ones and that’s the way we like it.
In our second change, we will have a drawing at 8:15 at each microphone for those shareholders hoping to ask questions themselves. At the meeting, I will alternate the questions asked by the journalists with those from the winning shareholders. At least half the questions – those selected by the panel from your submissions – are therefore certain to be Berkshire-related. We will meanwhile continue to get some good – and perhaps entertaining – questions from the audience as well.
Personally I think it’s outrageous that shareholders are being asked to submit questions to journalists (at least two of whom are friends of Buffett) who will then decide if it’s worthy enough to ask at the meeting. Who are the owners of the company?
It’s hard to envisage that any other publicly listed company would avoid a shareholder backlash over such a proposal.
If you own some “A” shares, you have made a significant investment in Berkshire and you are now told that a journalist will decide whether your question is interesting and important. That doesn’t seem right to me.
This proposal coming now is all the more unfortunate given that many shareholders will want to ask questions regarding the financial crisis as well as Berkshire’s recent share purchasing activities and they will now have a much diminished chance of doing so.
I know that in previous meetings there were questions being asked which had nothing to do with Berkshire Hathaway. I know Buffett doesn’t want to answer these types of questions and that’s ok, just say “no comment”. But please don’t limit your shareholders’ ability to ask questions – they should be allowed to ask whatever questions they like (free from journalistic interference).
There will always be questions that are not related to the company’s business, anyone who has been to these meetings knows that.
I was once in a very long meeting where one shareholder asked perhaps a dozen questions of Rupert Murdoch. The shareholder was actually a journalist with a very small holding in the company and was just using the event as an opportunity to ask lots of provocative questions in order to get a reaction for an online article that he was writing. To his credit, Mr. Murdoch remained very good natured and attempted to answer the questions as best he could. I never thought I would say this, but on that front, maybe Warren could take a leaf out of Rupert Murdoch’s book.
As an aside, can you imagine the tough questions that Carol Loomis and Becky Quick are going to choose to ask? Some of the interviews that Becky Quick has conducted with Buffett leave a lot to be desired. The very fact that Buffett has agreed to so many interviews with her clearly shows that he is very comfortable that she will not ask any “tough” questions.
A better way to handle questions, given the huge number of people attending the Berkshire meeting, would be to give all shareholders the opportunity to write down one question (well in advance of the meeting) which could then be aggregated and from which a certain number of questions could be chosen at random by an independent person. Those questions could then be asked by the journalists. At least this way, the journalists’ opinions on the worthiness of questions are not required and a random draw gives everyone a chance that their question may be asked – no matter what that question is.
The other problem of course with Berkshire’s proposed method is that if the journalists receive 10,000 e-mails they are highly unlikely to read all of them! Would you attempt to read thousands of e-mails? These people actually have other jobs to do. Many questions will therefore have absolutely no chance of being asked regardless of whether they are “interesting and important” or not.
You can also put money on the fact that many non shareholders will submit questions by e-mail – are they going to check every e-mail address back to a shareholder list? Is this even possible? What if I know the names of various Berkshire shareholders (which I do), I could create bogus e-mail addresses and submit questions on their behalf. I have no intention of doing this, but I simply ask the question: who knows who is who?
On another matter, I don’t see why Berkshire Hathaway shouldn’t make available a pod (or vod) cast of part of its annual meeting (maybe have a one hour pod cast of the highlights).
Many people can’t get to Omaha, Nebraska and many others who are not shareholders follow Berkshire closely. Obviously, many companies now use pod and vod casts as an effective means of communication with shareholders (and other interested parties) that cannot make it to a meeting.
There always seems to be this silly level of secrecy at Berkshire meetings. No video, no recording devices, despite the fact that Buffett and Munger never provide any information that could possibly be detrimental to Berkshire (if reported). Absolutely nothing would be given away through a pod cast. Even if they were to make comments of a sensitive nature (as I said, they never do), those comments could simply be taken out of the pod cast.
Given that there are two very prominent IT people on the Berkshire Hathaway board of directors, there doesn’t seem to be any legitimate excuse for not making better use of technology at Berkshire.
There are always those people who attempt to provide a transcript of the meeting (on their web sites) and they furiously write down as much as they can (probably missing half of what’s said, actually misquoting Buffett or Munger in parts and detracting from their own enjoyment of the meeting). So come on Warren, let’s give those people a break and let’s get Berkshire into the 21st century.
No comments:
Post a Comment