Every year, around this time of the year, Warren Buffett writes his annual letter to the shareholders of his holding company, Berkshire Hathaway. Besides writing about the companies' performance, the doyen of equity investments always writes entertainingly about a range of business and financial issues. As always, his wisdom and wit shines through his 2015 letter too. Click here to download the complete letter from Berkshire Hathaway.
Buffett explains who he appreciates investors who don't want dividends.
I would be remiss if I didn't salute another key constituency that makes Berkshire special: our shareholders. Berkshire truly has an owner base unlike that of any other giant corporation.
That fact was demonstrated in spades at last year's annual meeting, where the shareholders were offered a proxy resolution:
RESOLVED: 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 sponsoring shareholder of that resolution never showed up at the meeting, so his motion was not officially proposed. Nevertheless, the proxy votes had been tallied, and they were enlightening.
Not surprisingly, the A shares - owned by relatively few shareholders, each with a large economic interest - voted "no" on the dividend question by a margin of 89 to 1.
The remarkable vote was that of our B shareholders. They number in the hundreds of thousands - perhaps even totaling one million - and they voted 660,759,855 "no" and 13,927,026 "yes," a ratio of about 47 to 1.
Our directors recommended a "no" vote but the company did not otherwise attempt to influence shareholders. Nevertheless, 98% of the shares voting said, in effect, "Don't send us a dividend but instead reinvest all of the earnings."
To have our fellow owners - large and small - be so in sync with our managerial philosophy is both remarkable and rewarding. I am a lucky fellow to have you as partners.