Buffett renews call against executive greedBy Andrew Hill in Omaha, NebraskaPublished: May 4 2003 2:44 | Last Updated: May 4 2003 20:37 <http://news.ft.com/c.gif>;
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Warren Buffett launched a fresh assault over the weekend against greedy chief executives, complacent directors and pliable compensation consultants by urging investors to rebel against excessive executive pay.

The influential investor - one of America's richest men - told the shareholder meeting of Berkshire Hathaway, the investment and insurance group he chairs, there had been more misdirected compensation in corporate America in the past five years than in the previous century.

US chief executives "don't care whether their boards are diverse, or not diverse - they care about how much money they make", Mr Buffett warned more than 10,000 shareholders and guests who gathered in Omaha for the meeting.

Mr Buffett, 72, is one of the fiercest critics of US executive compensation and the abuse of stock option grants, which he blames for fuelling the corporate scandals of the past 18 months. Last year, he received a salary of only $100,000 and total annual compensation of just under $300,000.

He told shareholders that as owners of companies they had to "provide some countervailing force [against executives] or you will have what we had in the last 20 years - that is, an enormous disparity in the rates of compensation between people at the top and people at the bottom, and a disconnect between people at the top and the share owners who give them the money".

In a five-hour question-and-answer session on Saturday, Mr Buffett and Charlie Munger, Berkshire's vice-chairman, again attacked the majority of US companies that do not treat stock option costs as expenses. They agreed, however, that the most common method of valuation - called Black-Scholes - was not an effective way of valuing such performance incentives.

Shareholders gave the duo a rapturous reception, in sharp contrast to other annual meetings this year at which investors have castigated executives for poor performance, lax corporate governance and over-generous pay and benefits. At many other meetings, investors have cast significant votes against management. During the meeting, Mr Buffett said Berkshire, whose interests range from re-insurance to kitchenware and cowboy boots, would report record first quarter operating earnings of $1.7bn, on the back of strong results from the insurance operations. He said the non-insurance businesses were held back by the sluggish economy and he was pessimistic about the short-term outlook for NetJets, Berkshire's fractional jet ownership business.

Mr Buffett said MidAmerican Energy, 80 per cent owned by Berkshire, "will look at some big deals this year". "We don't have any clear-cut preferences as to whether it would be a natural gas pipeline, a domestic utility or, conceivably, even a utility in some country we feel good about," he said.

Berkshire revealed recently that it owned 13 per cent of the publicly traded shares of PetroChina, the Chinese state-run energy group, but Mr Buffett played down the significance of the announcement, saying it had been triggered by Hong Kong stock exchange rules.

Berkshire, which Mr Buffett said had $16bn in cash on its books at the end of March, has been on the look-out for bargains since the stock market began its dive in 2000.

Last week, Berkshire announced it would buy McLane, a distribution business, from Wal-Mart, the retailer, for just under $1.5bn, a month after agreeing to buy Clayton Homes, the prefabricated housing business, for $1.7bn.
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