| [Join YAPSS Membership, For Early Access to New Videos] https://www.youtube.com/channel/UCpzAAXa2cvyEnfc7rurcCcQ/join In this episode, Warren Buffett was asked regarding on Doug Ivester’s severance package in Coca-Cola Company and what justifies it, considering he had a very short tenure as CEO and that he took the reins from some very strong performance from Goizueta? In this episode, you’ll learn: - How to determine executive compensation? - What is Warren Buffett thoughts on Doug Ivester's severance package? - Warren Buffett and Charlie Munger comments on executive compensation in corporate America. (https://www.yapss.com/post/collection-warren-buffett-189-executive-compensation) #WarrenBuffett #CharlieMunger #BerkshireHathaway [Transcript] (Source: https://buffett.cnbc.com/2000-berkshire-hathaway-annual-meeting/) ~ Please visit the site above for full video of Berkshire Hathaway Annual Meeting. AUDIENCE MEMBER 00:08 Good afternoon, Mr. Buffett and Mr. Munger. My name is Bob Odem (PH) from Seattle, Washington. I’d like to say, first of all, how nice it is to come out to Omaha, and how I am made to feel comfortable by its people. I hope you both are as enthusiastic about the meeting as you seem to be in years to come. Mr. Munger, by the way, I am looking forward to your book coming out. My question has to do with Doug Ivester’s severance package and what justifies it, considering he had a very short tenure as CEO and that he took the reins from some very strong performance from Goizueta and to be relieved of his dismal performance by Doug Daft. My brother, still in the bottling and distribution business of Coke, cut this article from Bottlers’ World Magazine concerning the severance package. He said he also would retire, if he were offered this — (laughter) — 97.4 million in stock, 3 million per year for 2000 to 2002, 2 million per year, 2002 to 2007, 1.4 million per year from 2007 for the rest of his life. Anyway, I don’t see how — or here, car and cell phone, he gets that. That’s a Mercury Grand Marquis and mobile telephones, laptop computer, and the like. I don’t know why he’d need that. Anyway, I have been wondering how you voted on this, whether you supported it or not, or what degree, considering executive pay at Berkshire hasn’t risen except, perhaps, for the CFO who last got a raise, I believe, in 1997. WARREN BUFFETT 01:58 You asked — no, CFO’s gotten a raise every year. But the — you asked whether I supported it. Yeah, I can tell you, I supported it. Because with my 35 percent interest in 8 percent of Coca-Cola, I paid almost 3 percent of it myself, personally. I probably paid more severance pay than any man in the history of the world, personally. (Laughter) I was not on the comp committee. But I will say this. Doug Ivester did all kinds of really wonderful things for the Coca-Cola Company, over time. He was — for many, many years, when Roberto was running things, Doug — working with Don Keough, too, and I had this first hand from both of them. I wasn’t in Atlanta. But there was no question that he was a huge, huge asset and conceived and carried out many of the things that other people may have gotten even more credit for. Most of what you described, not the little things at the end, but most of what you described was contractually in place at the time that he left. I mean, those were deals that were made, restricted stock and all of that, that really occurred, in significant part, when Roberto was the chief executive officer and at Roberto’s recommendation. Doug’s devotion to Coke, his knowledge of Coke, I mean, he lived and ate and breathed Coke. But in my opinion, Doug Daft was the man for the job. And a change was made. But it was not because of any lack of attention by Doug Ivester. It was not because he hadn’t done great things as CFO of the company. But I think he was not the right man at the time he took over as CEO. He took over, as you know, when Roberto died quite suddenly. And there wasn’t any real option in terms of the — He was Roberto’s hand-picked successor. It’s almost inconceivable that somebody else would’ve been chosen at that time. And we made a decision, within a couple of years, that the company would move faster and better with Doug Daft in charge. And we made a deal in severance which was about 80 percent, or some very high percentage, embedded. And like I say, I paid more of it than anybody else. So it isn’t like it was all academic. And I think, considering some other factors, which maybe I’ll put in a book sometime, that entered into it, it was definitely the right decision for the Coca-Cola Company. [DUE TO LIMITED WORDINGS, FOR FULL TRANSCRIPT VISIT YAPSS.com] CHARLIE MUNGER 05:09 WARREN BUFFETT 06:02 CHARLIE MUNGER 08:07 WARREN BUFFETT 08:11 |
Charles Thomas Munger (born January 1, 1924) is an American investor, businessman, former real estate attorney, architectural designer, and philanthropist. He is vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett; Buffett has described Munger as his partner. Munger served as chairman of Wesco Financial Corporation from 1984 through 2011. He is also chairman of the Daily Journal Corporation, based in Los Angeles, California, and a director of Costco Wholesale Corporation.
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