Warren Buffett on Saturday defended his recent controversial vote on executive pay at Coca-Cola (NYSE:KO) and disappointing performance at railroad BNSF as investors grilled him on his Berkshire Hathaway conglomerate at its annual shareholder meeting.
The investment guru was peppered with questions at the meeting, part of a mostly festive weekend that Buffett calls "Woodstock for Capitalists," following concerns that Berkshire last year missed Buffett's five-year growth target for the first time in his 49 years at the helm.
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Buffett, 83, and company vice chairman Charlie Munger, 90, faced off with the audience and a hand-picked panel often excusing recent worries at the sprawling conglomerate.
"Over any cycle we will over-perform, but there's no guarantee on that," he said, saying that Berkshire is designed to perform best when markets are at their worst - unlike last year's 30% jump in the S&P 500.
At the start, Buffett was immediately questioned about Berkshire's abstention in the Coca-Cola equity compensation plan vote.
Buffett said last week that he thought Coca-Cola's controversial equity compensation plan was excessive, but Berkshire Hathaway abstained in the shareholders vote.
That revelation drew sharp criticism in the run-up to the meeting - particularly since Buffett has in the past called options wasteful and akin to a free lottery ticket.
On Saturday, Buffett said that "going to war" would likely not have been productive, and that Berkshire's abstention sent a clear message.
"I think the best result for the Coca-Cola Company was achieved by our abstention, and we will see what happens in terms of compensation between now and the next meeting of Coke."
But he also talked about the social pressures of board votes on compensation plans. "The social dynamics are important in board actions," he said.
The questions came a day after Berkshire Hathaway released first-quarter earnings that just missed analyst expectations.
That report noted weather-related disruptions at railroad BNSF - another topic of questioning on Saturday.
Buffett handed off, calling in BNSF executive chairman Matt Rose to talk about the company's service challenges.
"We're making significant investments," Rose reassured the audience.
And Buffett added that Berkshire could spend "many, many billions" to improve operations at the railroad, which is the country's largest player in the booming oil-by-rail business.
Last year, Berkshire Hathaway underperformed for the first time in nearly 50 years by Buffett's own preferred measure: gains in the company's book value, or worth, over five years lagged total returns in the Standard & Poor's 500 index.
That has prompted questions on whether the so-called Oracle of Omaha is finding it harder and harder to generate the stellar returns he's delivered for decades, particularly as the company grows so big it needs larger deals to make a difference to the bottom line.
The annual meeting in Omaha draws tens of thousands of people to hear Buffett and Munger answer hours of questions. The two talk about not only on the company's future, but on such topics as U.S. monetary policy and politics.
The meeting includes a massive exhibit floor that highlights the breadth of Berkshire's holdings - from ice cream at Dairy Queen to insurance at Geico, the BNSF railroad to jewelry retailer Borsheims.
While Buffett faced some pointed questioning from shareholders, many people in attendance here just listened to him because they consider themselves fans.
At one point Buffett, surprisingly, was asked if he had lost confidence in Berkshire Hathaway. In his annual letter to shareholders, Buffett disclosed that he had suggested to his estate's trustee that money left to his wife be largely invested in a low-cost Standard & Poor's index fund.
The question posed: Why an index fund and not Berkshire stock?
Because, he said, he's unconcerned about maximizing the money he will leave his wife after he passes away.
"There will be loads of capital left over" for her, Buffett said.
(Reporting by Luciana Lopez and Jonathan Stempel in Omaha, Nebraska; Editing by Bernard Orr)