Color Warren Buffett more mystified than angry over David Sokol's career suicide.
Sokol's illicit trading and deceit in the months leading up to his departure last month were "inexplicable and inexcusable," Buffett told Berkshire Hathaway (BRKA) shareholders at Saturday's annual meeting.
But the billionaire investor expressed no hostility toward Sokol and no regrets for Berkshire's initial press release, which was widely criticized as failing to hold Sokol accountable for his sins. Buffett said he believes Berkshire acted properly in handling the news, noting that the company promptly shared its findings with the Securities and Exchange Commission last month.
Buffett even said Berkshire "got our money's worth" in paying Sokol $24 million last year.
So those looking for the return of the swaggering Buffett who cleaned house at the scandal-ridden Salomon Brothers investment bank will have to keep waiting. Or maybe that Buffett just isn't coming back: after all, it has been 20 years.
"What I think bothers people is there wasn't some big sense of outrage" in Berkshire's initial press release, Buffett said. "I plead guilty to that. ... Dave did a lot of good things for us over 10 or 11 years."
The comments won't silence Buffett's critics, who wonder what ever happened to the Buffett who promised two decades ago to be "ruthless" in dealing with those who play fast and loose with the firm's reputation.
Asked why he wasn't ruthless in dealing with Sokol, Buffett admitted, chuckling, that his press release had come under "at least mild criticism." But he otherwise stood by his handling of the matter, and vice chairman Charlie Munger concurred, saying executives should be as ruthless as their duty requires but shouldn' t let anger slip into the decisionmaking "even one iota."
Asked why he didn't fire Sokol, Buffett noted that Sokol's resignation means Berkshire won't have to make severance payouts. Buffett also dismissed the notion that Sokol's misbehavior points to a judgment problem that could taint Buffett's succession plan. Buffett said he would put money on the unnamed leading candidate to take over as CEO being "a straight arrow."
Contrast this with the angry-sounding guy who told Congress in 1991 that the Salomon scandal, in which some top traders had tried to corner the Treasury market without hearing a peep of resistance from top management, had created a "stain" for the rest of the firm's workers.
There was not a trace of that rage in Buffett's remarks Saturday. Mostly, there was puzzlement and resignation.
Indeed, Buffett said he doubts he will ever be able to reconcile the greedy creep of 2011 with the apparently selfless Sokol of a decade ago, who by Buffett's account offered to split a big bonus pie with his junior partner rather than take two-thirds of it as Berkshire had proposed.
"Twenty years from now, I think I will not understand what causes a man to turn away $12.5 million without getting any credit in the world and then 10 or so years later do this for $3 million," Buffett said. Join the club.
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