2019 Berkshire Hathaway Shareholder Meeting MORNING SESSION chairman, and we make the big decisions jointly. It’s just that we haven’t had any big decisions. So, (laughter) we 1. Welcome and Munger’s insurgency campaign haven’t — we’re keeping him available for the next big one. WARREN BUFFETT: Thank you. But now at the formal meeting today, we’ll elect 14 directors, and you’re looking at two of them. And I’d like Good morning and welcome to Berkshire Hathaway. to introduce the 12 that will be on the ballot at 3:45. And for those of you who have come from out of state, And I’m going to proceed alphabetically. And if they’ll welcome to Omaha. The city is delighted to have you here stand. If you’ll withhold your applause because some of at this event. them get sensitive if certain people get more applause than others, and (Laughter) they’ll — and if you’ll withhold it till And for those of you who came from outside of the I’m finished, then you can applaud or not, as you see fit, country, welcome to the United States. having looked at these directors. (Laughter) So, we’ve got people here from all over the world. We’ve So, we’ll start on my left. Greg Abel, who’s both a got some overflow rooms that are taking care of people. chairman and a director. Greg? Yeah, oh, there we are. And we will just have a few preliminaries and then we will Right, OK. And going along alphabetically, Howard move right into the Q&A period. Buffett, Steve Burke, Sue Decker, Bill Gates, Sandy Gottesman— (applause) — Charlotte Guyman, Ajit Jain, We’ll break about noon for about an hour. We’ll come back who is also a vice chairman, Tom Murphy, Ron Olson, and do more Q&A until about 3:30. Then we’ll adjourn for Walter Scott, and Meryl Witmer. Now you can applaud. a few minutes, and then we’ll conduct the meeting. (Applause) I understand that in the room adjacent, that Charlie has 3. Berkshire’s Q1: Pay attention to operating earnings been conducting a little insurgency campaign. WARREN BUFFETT: Now, this morning we posted on I don’t know whether you’ve seen these, but these are the our website the quarterly, the 10Q that’s required to be buttons that are available for those of you — you keep filed with the SEC. We published it at 7 o’clock Central asking questions about succession. And Charlie wants to Time. And we also published an accompanying press answer that question by getting your vote today. So, it says release. — this one says, “Maturity, experience, why accept second best? Vote for Charlie.” (Laughter) And if we’ll put slide one up — these figures as usual require some explanation. As we’ve mentioned in the I, however, have appointed the monitors who have — annual report, the new GAAP rule of Generally Accepted collect the votes, so I feel very secure. (Laughter) Accounting Principles require that we mark our securities to market and then report any unrealized gains in our 2. Berkshire directors introduced earnings. WARREN BUFFETT: The first thing I’d like to do — And you can see, I’ve warned you about the distortions Charlie is my partner of 60 years, a director and vice from this sort of thing. And, you know, the first quarter of Page 1 of 79 2019 Berkshire Hathaway Shareholder Meeting 2019 actually was much like the first quarter of 2018, and I hope very much that newspapers do not read headlines We report on Kraft Heinz, of which we own about 27 saying that we made $21.6 billion in the first quarter this percent or so. We report on what they call the equity year against a loss of last year. method. Now, most stocks, when you get dividends, that goes into our earnings account, and their undistributed These — the bottom line figures are going to be totally earnings don’t affect us. They affect us in a real way, but capricious, and what I worry about is that not everybody they don’t affect us in an accounting way. studied accounting in school, or they can be very smart people but that doesn’t mean that they’ve spent any real We are part of a control group at Kraft Heinz, so instead time on accounting. of reporting dividends, we report what they call equity earnings. And I really regard these bottom line figures, particularly if they’re emphasized in the press, as doing — as potentially Kraft Heinz has not filed their 10K for the 2018 year with being harmful to our shareholders, and really not being the SEC. And therefore, they have not released the first helpful. So, I encourage you now, and I encourage all the quarter of 2019 earnings. Now, normally, we would include press that’s here, focus on what we call our operating our percentage share of those earnings, and we’ve done earnings, which were up a bit. And forget about the capital that every quarter up till this quarter. But because we do gains or losses in any given period. not have those figures, we’ve just — we’ve not included anything. Now, they’re enormously important over time. We’ve had substantial capital gains in the future; we have substantial We received 40 cents times — $130 million of dividends in unrealized capital gains at the present time; we expect to the first quarter from our shares, but that reduces our have more capital gains in the future. carrying basis and it is not reflected in the earnings. So, that’s an unusual item which we have mentioned, They are an important part of Berkshire, but they have specifically pointed out in our press release as well as absolutely no predictive value or analytical value on a included in our own. quarterly basis or an annual basis. And I just hope that nobody gets misled in some quarter when stocks are down But there is nothing in here, plus or minus, for Kraft and people say, “Berkshire loses money,” or something of earnings, Kraft Heinz earnings this year, whereas there was the sorts. It’s really a shame that the rules got changed in last year. And when we have the figures, obviously we will that way, but we will report. report them. Let’s see what beyond that I want to tell you. But we will also explain, and we will do our best to have 4. Berkshire signs 20-year lease for its Omaha the press understand the importance of focusing on headquarters operating earnings, and that we do not attract shareholders who think that there’s some enormous gain because in the WARREN BUFFETT: I think — oh yes, I’d wanted to first quarter the stock market was up. mention to you, the Kiewit Company, which has been our landlord since 1962 — 57 years — has owned the building There’s one other footnote to these figures that I should in which Berkshire is headquartered. point out. It’s already been picked up by the wires from our 7 o’clock filing. Page 2 of 79 2019 Berkshire Hathaway Shareholder Meeting Kiewit Company is moving their headquarters and, in the business, you’ll know that that’s the yearly volume for process, will be doing something with the building. And some furniture stores, and here in Omaha, the 50th or so they very generously, as they always have been, they came largest market in the country, maybe even a little less, $9.3 and said, “What kind of a lease would you like? Since we’re billion (million) I think probably exceeds anything any leaving, and we’ve always sort of worked these things out home furnishing store’s ever done in one day. as we’ve gone along.” And so Bruce Grewcock, who runs Kiewit, said, “You just sort of — you name your terms and And we have people pitching, and we have all the people, what you’d like. So, you — no matter with happens with virtually all of the people from the home office, some of the building, you’re all set.” them, you know, are — they’ll take on any task. We have a bunch of people from National Indemnity, for example, So, I was about to sign a ten-year lease for the present that come over, and they’ve been some of the monitors space, but Charlie said, “Ten years might be long enough around. for me but,” he said he would like me to sign one for 20 years, considering. And in terms of the exhibit hall, more than 600 people from our various subsidiaries give up a weekend to come And — so we are entering a 20-year lease, and I confess to to Omaha, work very hard, and tomorrow, 4:00 or 4:30, or you that we now occupy one full floor, as we have for I should say today at 4:00 or 4:30, they will start packing up decades, and the new lease provides for two floors. So, I things and heading back home. And they come in, and I just want you to know that your management is loosening saw them all yesterday, and they were a bunch of very, very up just a little bit. (Laughter) happy, smiling faces. And, you know, they work hard all year, and then they come in and help us out on this And whether or not we fill them is another question.