2012: How does Buffett vote proxies for Berkshire's stock investments?

BECKY QUICK: This question comes from David Schermerhorn (PH) in Boulder, Colorado.

And he writes that “Berkshire Hathaway has several substantial investments in other publicly traded companies.

“As a shareholder, Berkshire is entitled to annually cast votes on matters such as election of directors, advisory vote on executive compensation, approval of stock option plans, and so forth.

“So could you tell us what goes into your thinking and decisions with respect to how you vote our shares in these companies?”

WARREN BUFFETT: Yeah. We virtually never have voted against management, but we’ve done it a couple of times. There have been a —

CHARLIE MUNGER: Yeah, in 50 years.

WARREN BUFFETT: Yeah. There have been a couple of times when we thought — on the question of stock option expensing when that was put on a ballot.

If we — there may have been a particularly egregious option grant or something, we might have voted against, but our general feeling is that when we’re a large shareholder of a company that we certainly generally like the business, we generally like the management.

We realize that they’re not going to subscribe to our views 100 percent, in many cases 90 percent or 80 percent. Doesn’t mean we think they’re bad people or anything. They just — they have a different — they’re sort of judging by behavior elsewhere. And they’re perfectly decent people, but they don’t think about things exactly the same way we do.

But that doesn’t rule out owning a big piece of the business. We are not in the business of trying to change people. We don’t try and change people when we buy the entire business. We think it’s like marrying somebody to change them. It just doesn’t work very well.

CHARLIE MUNGER: Doesn’t work very well with children, either. (Laughter)

WARREN BUFFETT: No. And we know we don’t want anybody to marry us to change us.

So I mean, we’re not going to do it — we accept people the way they come, pretty much. Doesn’t mean we look — we decide we’ll associate with anyone, but we don’t expect everybody to be clones of us.

And if we were to see a particularly dumb merger, a particularly egregious stock option plan, we might vote against it. It would pass anyway. We wouldn’t conduct a campaign against it.

But we have seen a few of our companies engage in some — what we thought were really dumb deals, and we’ve usually been right, but we couldn’t stop them.

But we have — I think we’ve voted against maybe one or two of them.

Charlie?

CHARLIE MUNGER: Well, I think you’ve said it all.