QuestionerThis spring, Koch asked shareholders to approve a magnanimous stock option program for its executives. Why did you abstain rather than voting no against a corporate action that deserved to be shouted down?
WarrenWe made a very clear statement about the excessiveness of the plan, and at the same time, we in no way, went to war with Coca-Cola. We have no desire to go to war with Coca-Cola.
QuestionerIn the past, you have said that people should operate within their circle of competence. My question is, how does one figure out what one circle of competence is?
WarrenWell, I don't think it's as difficult to figure out competence as it may appear to you. If you're 5'2-2, you don't have much of a future in the National Basketball League. And if you're 95-year-old. of age, you probably shouldn't try and act the romantic lead part in Hollywood. But competency is a relative concept. And what a lot of us need, including the one speaking, is what I needed to get ahead was to commit against idiots. And luckily, there's a large supply.
QuestionerHave we reached a new point where criminal activity in Wall Street is being institutionalized, sort of allowed to have happened because they're too big to fail, too big to go to jail, and too big to be regulated to follow the law.
WarrenI think behavior on Wall Street is enormously improved as a result of the trauma we've just been through. And so I think the worst of it is behind us. But you're never going to have perfect behavior when a bunch of human beings live in a miasma of easy money. I lean way more toward prosecution of individuals. and corporations. The way to change behavior is to have the fear, at least among people that may be doing the wrong things is to have the fear that somehow it's going to come home to them and hit them hard.
QuestionerDo you think that financial literacy should be a standard part of the curriculum in our nation's schools? And if so, how early do you think it should begin?
WarrenWell, I'm not sure the schools are at fault. I would place most of the fault with the parents.
QuestionerI agree with the most important thing is the parents, but not everybody gets the right parents.
WarrenYeah, well, it's very hard to fix people who have their own parents.
QuestionerWell, let's just say you have the job of fixing people that have the wrong parents. What would you do about it?
WarrenWho would ever believe that I would have any ability to fix all the people that have their own parents? I think, generally speaking, that the, you know, the activist,
[3:04]
Warrenif they get the price of the stock up one way or another, you know, that, you know, that that's going to end their interest in the business. So I don't think they're looking for, often, they're not looking for permanent changes for the better in the business, but they're looking for a specific event that will result them a big price change. Some of the stuff, you'll find an activist who is not what you'd want to marry into the family, going after a company you would never buy into. And when that happens, it reminds me of Oscar Wilde's definition of fox hunting. He said the pursuit of the uneatable by the unspeakable. It's very seldom that publishing compensation accomplishes much for the shareholders. In fact, you can argue that much of what's going on in corporate America, well, I would put it this way, corporate CEOs as a group, would be being paid a lot less money if proxy statements hadn't revealed how much other people were getting. paid. There's no CEO that looks at other proxy statements and comes away thinking I should get paid less. I mean, that, you know...
QuestionerAs much has been written and many have speculated about your successor. However, has there been any discussion at your board meetings about a replacement for your partner, longtime friend, and co-chairman Charlie Munger?
WarrenBut so far, nobody's brought up in the meeting any successor to Charlie. And frankly, I have a lot of trouble thinking of anybody that could be a successor to Charlie. successor to Charlie. I would be very surprised if a few years after my successor takes over, maybe sooner, that there isn't some relationship, a partnership that enhances the CEOs not only achievements, but the fund they have.