Buffett Agitates On CEOs and Tax

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Buffett Agitates on CEOs and Tax

Mon May 5, 6:59 AM ET

By Bill Rigby

OMAHA, Neb. (Reuters) - Warren Buffett, the billionaire investor, urged big shareholders on Sunday to get together to tackle bad chief executives and dismissed President Bush's dividend tax-cut plans as unfair.

He also said he had named four potential successors to lead his Berkshire Hathaway Inc. insurance and investment company after him, and was looking at making more investments in Asia.

Buffett, who has built up a devoted following for the success of his investing style and firm stance on ethics in business, was speaking at a press conference in Omaha, Nebraska, the day after Berkshire Hathaway's annual meeting attracted a record 15,000 shareholders.

The 72-year-old Omaha native, the second-richest man in the world behind Bill Gates, said it was time for large shareholders to force change in U.S. boardrooms, as new rules and individual shareholders alone could not.

Companies saw large shareholders as "the 800-pound gorilla they don't want to have mad," Buffett said, suggesting institutions get together to present a set of principles to companies they invest in, threatening to withhold support if the companies do not comply.

Buffett, a long-time critic in his widely read annual reports of corporate greed, played down his own role in the process, saying his efforts to rein in wayward chief executives would take place behind closed doors.

"I've said my piece basically. I'm not going to lead a revolution."

BAD BEHAVIOR ON WALL STREET

He singled out accountants and Wall Street bankers for their role in the decline in corporate ethics.

"You would be amazed how compliant auditors have been in the past decade, not only co-operating but suggesting techniques for making numbers less useful -- less truthful -- to investors."

Buffett, who started his career as a broker and was once chief executive at Salomon Brothers, said the recent settlement by Wall Street firms over their misleading use of research was welcome.

"It's a step in the right direction," said Buffett. "It tells them (Wall Street firms) that someone is watching them. It forced them to acknowledge certain behavior -- which they would have carried on doing -- was unacceptable."

ASIA IN SIGHTS

Buffett said he was interested in investing in Asian companies, following the recent increase of his stake in Chinese oil company PetroChina Ltd, but said bargains were hard to find.

"We've been looking at companies there," Buffett said of Asia. "We are open to buying stocks in them, and where there is a possibility -- not in China -- we would buy entire businesses."

There are restrictions in China on foreign ownership in many industries.

Buffett, who said he owns several Asian equities in addition to PetroChina, said he monitors Japanese companies frequently, but hasn't seen many buying opportunities there, despite the slide in stock prices.

"The returns on equity are very low in Japan," he said. "I would have thought I would find more bargains -- I would have thought there would be a plateful -- but we don't find lots."

He conceded that acquisitions or stock purchases in Asia were more risky than in the United States: "There's a little more chance of making a mistake. But we're willing to do it."

ATTACKS TAX PLAN

Asked about President Bush's plan to eliminate the tax on companies' dividends, Buffett said it would unfairly benefit rich people like himself, at the expense of ordinary workers.

"He (Bush) is not changing the amount the American public sends the government," Buffett said, "just changing who does it." The only way to cut taxes is to cut government spending, Buffett added.

Buffett, who plans to give away his more than $30 billion fortune after his death, campaigned several years ago against phasing out certain estate taxes, arguing that it would unfairly benefit rich families.

Planning his own company's future, Buffett said he has named four potential successors to run Berkshire after he dies or is unable to run the company, but said those names could change.

Buffett did not identify the candidates, but said he did not want someone in their 60s to succeed him.

Buffett, who has run Berkshire for almost 40 years, has no plan to retire, unless forced to by physical or mental incapacity.

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