Warren Buffett’s announcement on March 30 of David Sokol’s resignation has been a topic of much discussion since last week. Buffett, CEO of Berkshire Hathaway, said in the announcement that Sokol had for years discussed resigning to work on his family’s investments and fund “philanthropic interests.” Sokol was chair of “several Berkshire subsidiaries,” according to the news release. He had been spoken of as a potential successor to Buffett.
The announcement also disclosed that Sokol had bought and sold shares of a company that he had recommended to Buffett for purchase, and Buffett said in the release that “Dave mentioned that he owned stock in the company. It was a passing remark and I did not ask him about the date of his purchase or the extent of his holdings.”
(This reporter is a long-term shareholder of Berkshire Hathaway.)
Later in the release Buffett also stated: “Dave’s purchases were made before he had discussed Lubrizol with me and with no knowledge of how I might react to his idea. In addition, of course, he did not know what Lubrizol’s reaction would be if I developed an interest. Furthermore, he knew he would have no voice in Berkshire’s decision once he suggested the idea; it would be up to me and Charlie Munger, subject to ratification by the Berkshire Board of which Dave is not a member.” He also stated that, “Neither Dave nor I feel his Lubrizol purchases were in any way unlawful.”
The Argyle Executive Forum, a membership organization for executives, with 30,000 members, conducted a poll of its executive membership on Monday regarding how members feel about the Lubrizol transactions by Sokol (left), and more than 800 members responded, according to Argyle’s release. Here is what Argyle asked, and the breakdown of member’s responses:
"Question 1: David Sokol’s personal purchases of Lubrizol stock in the months prior to Berkshire Hathaway’s acquisition of the company were illegal.
I agree – 25.1%
I disagree – 36.1%
I’m not sure – 38.8%
Question 2: Regardless of the legality, David Sokol’s personal purchases of Lubrizol stock in the months prior to Berkshire Hathaway’s acquisition of the company were unethical:
I agree – 77.5%
I disagree – 12.2%
I’m not sure – 10.3%
Question 3: If David Sokol’s personal purchases of Lubrizol stock in the months prior to Berkshire Hathaway’s acquisition of the company were legal, the law should be changed and his behavior should have been illegal:
I agree – 47.7%
I disagree – 31.6%
I’m not sure – 20.7%"