[Viewpoint]Treating the owners like owners

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[Viewpoint]Treating the owners like owners

Nebraska is a farming state located in the Great Plains in the American Midwest. The population of its largest city, Omaha, is about 400,000. But once a year, on the first Saturday in May, Omaha is in the international news. On this day,legendary investor Warren Buffett leads the general meeting of Berkshire Hathaway Inc. stockholders. This year’s meeting will be held on May 3.
In 1962, Buffett purchased a company called Berkshire Hathaway in a small town in Massachusetts at $8 per share.
According to Buffett, Berkshire Hathaway, a textile manufacturer at the time, was “a long cigarette someone stopped smoking and just threw away.”
The company was transformed into an investment company in Buffett’s hands. Its price is currently more than $130,000 per share.
The value of a Berkshire Hathaway share has increased as much as 16,000 times in 46 years. This is how Buffett became the richest man in the world this year, overtaking Bill Gates, the chairman of Microsoft.
In 2003, I had an opportunity to cover the general meeting of the Berkshire Hathaway stockholders, with Buffett presiding. The meeting was held in the largest indoor gym in Omaha.
Stockholders from all over the country gathered there. At the beginning of the meeting,the company showed a video starring Buffett.
Buffett played stand-up comedian, actor and singer, thoroughly captivating the audience.
The heavy atmosphere of the stockholders’ general meeting changed into the exciting atmosphere of a concert or performance.
After everyone had a good laugh, Buffett and Vice Chairman Charlie Munger stood in the middle of the stage. Buffett was 72 years old and Munger was 79 at the time.
The two explained the statement of accounts and answered questions on the spot. Hands went up here and there.
Those in attendance were old and young, men and women. Except for a 30-minute break, the question-and-answer session lasted as long as five hours.
Buffett spoke candidly about his thoughts on the international economy, the stock market, company management and even his successor.
This is the reason why the attention of Berkshire Hathaway investors is focused on the general meeting of stockholders. You only get to hear Buffett in person giving his “one-point lesson” on investment at the meeting.
As soon as the meeting was over, Buffett rushed to a furniture company run by Berkshire Hathaway to attend a barbecue party for stockholders. Wearing an apron, barbecuing meat for the guests, Buffett looked like anyone’s congenial grandpa next door.
The next morning, Buffett also appeared at an autograph session held at Borsheim’s, a large retail jewelry store owned by Berkshire Hathaway.
While he signed autographs for the stockholders, his wife sang songs with a piano’s accompaniment.
It was not necessary to ask the stockholders how they felt receiving such gracious treatment from the company’s chairman and his wife, who are in their 70s and are also the world’s richest couple.
Watching Buffett’s activities at the general meeting, reminded me of scenes at a general meeting of stockholders in Korea.
In typical, Korean-style general meeting, company officials only discuss the agenda presented by the company, rush to bang the gavel and then conclude the meeting.
Therefore, to small shareholders the agenda of the meeting is only thought to be boring litanies.
They have eyes only for the free gifts, souvenirs distributed to participants in the general meeting.
However, there was a fresh, eye-catching novelty at a general meeting of stockholders this year.
It was the general meeting of Pulmuone stockholders held on March 20 at the House of Literature in Yaejang-dong, Seoul.
The chief executive officer of Pulmuone, Nam Seung-woo, conducted the meeting as if it was a talk show and he was host. Fresh and interesting questions were also raised spontaneously by the shareholders.
He was asked: “If you were a friend of mine, not the head of the company, would you tell us to buy your company’s shares now? Why do you think the company was defeated in the tofu business by a competitor?”
Other questions were funny: “I think your hairstyle is cool. When did you start shaving your head?”
Nam answered all of the questions raised by the stockholders for two hours.
After the meeting, he served the company’s new food products to the stockholders.
I thought there was a lot of similarity to Berkshire Hathaway’s general meeting of stockholders, and I was right.
An outside director of the company saw video footage of Buffett’s general meeting of stockholders by chance, and broached the idea to Pulmuone management.
Pulmuone plans to continue to hold the general meetings of stockholders in this manner.
Recently, the business community has asked the government to provide a system with which companies can protect themselves from hostile takeovers through mergers and acquisitions.
The reason is that Korean companies feel defenseless against hostile takeover attempts by foreign companies.
But first there is one thing we should ask: Do Korean companies treat stockholders as the owners of their companies?
I think there is no other solution than this to protect Korean companies from hostile takeovers through mergers and acquisitions.

*The writer is deputy business news editor of the JoongAng Ilbo.

by Jung Kyung-min
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