Sokol Says He Should Have Left Berkshire Earlier

[Rabbitisrich]

 

Sokol effectively got thrown under the bus as a result of the fairly vocal outrage over his trading in Lubrizol following this disclosure. Munger admitted as much in an interview (CNBC, I think) following that year's Annual Meeting.

 

Best,

Ragu

 

You are ignoring the important aspects of this skerfuffle. Sokol claimed to have purchased Lubrizol following independent research. He stood by this claim in a live interview on CNBC. Citi provided a different account in which Sokol contracted their services to provide a list of potential merger candidates while acting in his capacity as a Berkshire officer. He then directed Citi bankers to contact Lubrizol's CEO, James Hambrick, to discuss the merits of a merger. Without disclosing any of these facts, Sokol reported the idea to Buffett, and arranged a fact finding dinner with Hambrick, which ultimately sealed the buyout.

 

So you have the difference between a guy who likes a company, and is bringing the idea to you on its merits, versus a senior officer who has abused his position to appropriate the corporation's research, initiate dealmaking proceedings behind your back, and report information from an influential meeting without clarifying his conflicts. Why would you make someone like that CEO?

[ragu]

but WEB and munger hold their executive to higher standard i think, unlawful is a must, but not nearly good enough

 

Seriously, is legality the only standard?  Not for Buffett nor for me.

 

hyten1 and netnet,

 

From the same press release (pg. 1):

 

I had not asked for his resignation, and it came as a surprise to me.

(emphasis supplied)

 

Best,

Ragu

 

p.s. netnet, I have not offered an opinion on Sokol's actions on this forum yet. This is simply a discussion with respect to Buffett/Berkshire's official position in this matter.

[netnet]

What surprises me is, why is Berkshire Hathaway not having a pre-clearance for all employees trading activity? they need to have a formal process that employees just follow.

 

Sometimes I think that berkshire is run like erstwhile AIG.

 

 

 

They absolutely do have a policy see Kumar's quote of same on this thread.

 

 

 

I had not asked for his resignation, and it came as a surprise to me.

 

 

 

In that world (upper reaches of corporate America, in this case Berkshire) and with the level of service, and personal bonds (with Buffett), you let the guy go gracefully,  i.e. he resigns before you have to fire him.

[ragu]

You are ignoring the important aspects of this skerfuffle.

 

Rabbitisrich,

 

Not at all.

 

[...]Citi provided a different account in which Sokol contracted their services to provide a list of potential merger candidates while acting in his capacity as a Berkshire officer. He then directed Citi bankers to contact Lubrizol's CEO, James Hambrick, to discuss the merits of a merger.

 

All of the above information with respect to Citi's involvement was known to Buffett/Berkshire at the time of the press release announcing Sokol's departure.

 

Best,

Ragu