GGA on Governance Implications Around Increased Berkshire Hathaway Stake in Home Capital

Peter Landers
Partner / BBA (Hon)

Peter Landers is a Partner at Global Governance Advisors. He supports boards and senior management…

Proxy firm, Institutional Shareholder Services (ISS), recently advised shareholders of Home Capital to vote against Berkshire Hathaway’s bid to increase stake in the company.

Commenting on the corporate governance implications in an interview with BNN, Peter Landers, Partner, Global Governance Advisors, stated, “It seems like we have a diverging amount of opinions. You have certain shareholders and ISS that are saying you know what we think that things are pretty good. We’ve seen a good recovery the last couple of months and maybe we don’t need that second tranche of Buffett’s money. But then you have others such as the board and other shareholders who think that having this additional capital being brought on board will further strengthen our cash flows and really set us up for the future.”

He added that Warren Buffett, over the years has been quite vocal voicing governance concerns and his potential ownership stake creates an interesting dynamic, since the company now has the potential to have a shareholder own almost 40% of the shares. That will ultimately provide Warren Buffett and Berkshire Hathaway with additional flexibility and control over the company strategy and its long-term future.

Peter further delved into whether boards should reach out to advisory firms to garner a second opinion, saying, “We are definitely seeing more engagement over the last three to five years. Not only with ISS and Glass Lewis but with all of the company’s shareholders, at least the major ones. The reason for that is the power of say on pay votes and the power of individual director voting. The power that these shareholders have, has really forced Boards to be a lot more cognizant of shareholder views and to take them into account when making their final decision.”

Full Interview

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