Investor Warren Buffett would much prefer to use Berkshire Hathaway’s tremendous pile of cash to buy businesses instead of returning it to shareholders.
This strategy has worked incredibly for many years, and since the financial crisis Berkshire Hathaway shares are up 125% in a five-year period, and they acquired companies like Heinz and Burlington Northern Santa Fe railroad during that time.
Because Berkshire Hathaway is currently holding over $40 billion worth of cash, there are shareholders that would like to see this policy change.
This past Friday Berkshire Hathaway disclosed the proxy filing stating that during the coming annual meeting, shareholders will have an opportunity to vote on a proposal that will encourage the business to start paying an annual dividend.
“Whereas the Corporation has more money than it needs and since the owners unlike Warren are not multi-billionaires, the board shall consider paying a meaningful annual dividend on the shares,” reads the proposal. It was introduced by David Witt, an investor of Berkshire Hathaway stock that currently owns 70 shares worth $8588 at the time of this writing.
Shareholders should not bother holding their breath, and this is and because a small shareholders making the proposal.
The company tells us that the Berkshire board considers putting a return of capital program together regularly, and always decides against it.
“The board of directors does not believe this proposal is necessary in light of the fact that on an annual basis the Board of Directors does in fact consider whether or not the Corporation should continue to retain all of its earnings,” said the company in its proxy.
Without much of a surprise, the board for Berkshire Hathaway is recommending that shareholders vote against the proposal put forth by Mr. Witt.
The board of directors at Berkshire Hathaway recommends that shareholders vote against the proposal and recommends that the company “establish reasonable, quantitative goals for reduction of greenhouse gas and other air emissions at its energy generating holdings,” and create a report that will outline the strategy used to meet these goals.
In this specific case, the board at Berkshire believes they know better than shareholders.
“We recognize the importance of reducing greenhouse gas and other emissions to our shareholders and the future of Berkshire and its subsidiary companies,” said the company in its proxy.
In recent years, similar proposals have not passed, and the board “does believe that establishing quantitative goals for the reduction of greenhouse gas and other air emissions at its energy generating holdings and that publishing a report that includes plans to retrofit or retire existing coal burning plants is a prudent exercise to undertake.”