CalPERS to vote to replace Buffett as Berkshire chairman

CalPERS revealed its position in a filing with the Securities and Exchange Commission, ahead of Berkshire’s annual shareholders meeting

California Public Employees’ Retirement System (CalPERS), the largest US public pension fund, disclosed Tuesday that it intends to vote for a Berkshire Hathaway shareholder proposal that would replace Warren Buffett as chairman.

CalPERS revealed its position in a filing with the Securities and Exchange Commission, ahead of Berkshire’s annual shareholders meeting April 30.

The shareholder measure from the National Legal and Policy Center calls for an independent chairman and says that the roles are ‘greatly diminished’ when a single person holds the CEO and chairman titles, resulting in weaker corporate governance.

Buffett became CEO of Berkshire in 1965, and has been chairman since 1970. Under the proposal, Buffett could continue to serve as CEO.

Berkshire’s board opposes the measure, saying it believes that ‘as long as Buffett is Berkshire’s CEO, he should continue as board chair and as Berkshire’s CEO,’ though added that in the past Buffett has said that when he is no longer CEO, a non-management director should be named board chair.

The proposal faces an uphill battle; Buffett himself holds 32% of voting interest in the company.

In its filing, CalPERS said it holds over $450 billion in total assets, including about $2.3 billion in Berkshire Class A BRK and B stock BRK.

CalPERS also disclosed it supports four other shareholder proposals that the Berkshire board opposes, including one that would require more transparency into the conglomerate’s climate-related risks and opportunities.

A recent study cited Berkshire as the sole holdout among major North American companies in reporting how they contribute to — or limit — climate change. Berkshire has significant investments in both renewable-energy companies and fossil-fuel energy companies, but releases no data about its carbon emissions or any other climate issues.

We believe it is necessary that Berkshire Hathaway provide shareowners with an annual assessment on how it manages physical and transitional climate-related risks and opportunities, CalPERS said in its filing. This is especially true for companies in carbon-intensive industries or those that have the potential to be significantly impacted by climate change such as utilities and insurance companies – both of which are contained in the company’s portfolio.