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ISS rebukes Buffett's Berkshire Hathaway over climate change, governance

FILE PHOTO: Berkshire Hathaway logo is displayed on a screen on the floor of the NYSE in New York

By Jonathan Stempel

(Reuters) - A leading shareholder advisory firm recommended on Thursday that Berkshire Hathaway shareholders withhold votes to reelect five directors at Warren Buffett's conglomerate, citing concerns about climate change and governance.

Institutional Shareholder Services (ISS) said lead independent director and audit committee chair Susan Decker deserved a "withhold" vote at Berkshire's May 4 annual meeting.

It said this was because Berkshire is a significant emitter of greenhouse gases, is not disclosing enough about climate change-related risks and opportunities it faces, and is not taking minimum steps needed to address those risks.

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ISS also recommended withholding votes from Stephen Burke, Kenneth Chenault, Charlotte Guyman and Thomas Murphy Jr, who comprise Berkshire's compensation committee.

It said this reflected their "poor stewardship" over executive pay, with top executives' compensation not linked to Berkshire's profitability or stock price, and a share structure that gives Buffett outsized voting power.

The 93-year-old billionaire has led Omaha, Nebraska-based Berkshire since 1965. As of March 6, he owned about 15.1% of its stock but controlled 31.2% of its voting power.

Berkshire did not immediately respond to a request for comment to Buffett's assistant.

Decker is a former president of Yahoo, while Chenault was once chief executive of American Express.

Berkshire's businesses including the BNSF railroad, Geico car insurance, and dozens of energy, industrial and retail units.

It has long defended its disclosures, and said requiring more was often inconsistent with its decentralized culture of letting businesses operate without interference from the top.

In 2023, Berkshire awarded Vice Chairmen Greg Abel and Ajit Jain, who oversee day-to-day operations, $20 million each in salary.

Berkshire does not grant stock options. Abel is expected to eventually succeed Buffett as chief executive.

Buffett's annual salary is $100,000, but Forbes magazine estimates his fortune at more than $130 billion.

He owns mostly Class A shares, which have greater voting rights than the Class B shares that most Berkshire shareholders own.

ISS separately endorsed shareholder proposals for more disclosures about Berkshire's plans to reduce greenhouse gases and improve diversity, equity and inclusion. Berkshire opposes these proposals.

In 2021, ISS also recommended that shareholders withhold votes from the directors on Berkshire's compensation committee. All won reelection with at least 90% of the votes cast.

(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)