Berkshire Hathaway Board Recommends Shareholders Vote Against Dividend

Warren E. Buffett prefers to use Berkshire Hathaway’s huge cash pile to buy up companies, rather than return it to shareholders.

It is a strategy that has worked well for years, with Berkshire shares up 125 percent in the five years since the financial crisis, and the company still acquiring huge companies like Heinz.

But with Berkshire sitting on more than $40 billion in cash, some shareholders would like to see a change in the company’s policy.

On Friday, Berkshire disclosed in a proxy filing that at its upcoming annual meeting, shareholders will have a chance to vote on a proposal that would encourage the company to pay 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,” the proposal reads. It was introduced by David Witt, an individual investor who owns just 70 shares of Berkshire stock, worth about $8,588.

Shareholders shouldn’t hold their breath, and not just because the proposal is coming from one small shareholder.

The Berkshire board, the company said, regularly considers return of capital programs, and regularly decides against them.

“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,” the company said in its proxy.

Unsurprisingly, Berkshire’s board is recommending shareholders vote against Mr. Witt’s proposal.

The Berkshire board is also recommending that shareholders vote against a shareholder proposal that calls for the company to “establish reasonable, quantitative goals for reduction of greenhouse gas and other air emissions at its energy-generating holdings,” and publish a report outlining its strategy to meet the goals.

In this case, as well, the Berkshire board believes it knows 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,” the company said in its proxy.

But, noting similar proposals have not passed in recent year,s the board “does not 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.”