Buffett’s Handling of Deputy Baffles Some Experts

By BEN PROTESS, EVELYN M. RUSLI and SUSANNE CRAIG
NYT

Warren E. Buffett is an old-school capitalist with a rock star’s aura, a global celebrity who is revered like a small-town hero.

Yet that carefully cultivated image — the envy of nearly every top executive — risks being tarnished by a disclosure that he knew one of his right-hand executives had bought shares in a company before Mr. Buffett’s company announced a deal for it.

Mr. Buffett is certainly not the typical chief executive, and the questions surrounding him concern an apparent failure to act that had corporate governance experts and analysts scratching their heads on Thursday. The scrutiny stems from a meeting in January, when the deputy, David L. Sokol, approached Mr. Buffett about possibly buying a lubricant manufacturer. During the discussion, Mr. Sokol, once seen as a potential successor to Mr. Buffett, made a brief admission to his boss: he owned stock in the takeover target.

At that point, most corporate chieftains would have asked questions, directed the executive to seek legal advice or even put the idea of a deal on ice, experts said. But Mr. Buffett did none of those things — even though his company, Berkshire Hathaway, like most large companies, has policies that restrict employees from using or sharing confidential information for “stock trading purposes.”

(More here.)