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OMAHA, Neb. -- Warren Buffett shrugged off concerns about his Berkshire Hathaway conglomerate, which has trailed the overall market, and told shareholders Saturday to remain optimistic about his company, as well as the American economy.
More than 30,000 people descended on the annual gathering to listen to Buffett and Berkshire Vice Chairman Charlie Munger, who faced questions about Berkshire's prospects for growth and acquisitions, and also how Buffett came to handle a vote on pay packages crafted for Coca-Cola executives,.
Buffett abstained from voting Berkshire's 400 million shares against the compensation plan last week.
However, he has long advocated against exorbitant executive pay, and after he described Coca-Cola's package as excessive.
"I thought this was the most effective way of behaving at Berkshire," Buffett said Saturday.
Buffett said he told Coke's CEO privately that he opposed the compensation plan, but didn't want to criticize the company publicly or join another Coke investor's very public campaign to curtail that pay.
"We made a clear statement about the excessiveness of the plan, but we didn't go to war with Coke in any way," Buffett said.
Shareholder Jake Kamm said the explanation Buffett offered initially for not voting against the pay package was not convincing.
"It's a little bit of spin," said Kamm, who teaches finance at Baldwin Wallace University near Cleveland, Ohio.
Buffett said the true test will come when Coke reveals its pay packages over the next year.
Buffett's son, Howard Buffett, serves on Coke's board and supported the compensation plan, which raised some hackles among Berkshire shareholders because he is on the shortlist to take a powerful position at the company on Buffett's departure. But Buffett said Berkshire shareholders shouldn't worry about his preference that his son one day become Berkshire's chairman.
Buffett also defended joining with investment firm 3G Capital last year to buy H.J. Heinz Co. That $23.3 billion deal represents a shift in Buffett's investing style because Berkshire usually operates alone and leaves the companies it acquires largely unchanged.
"I do think 3G does a magnificent job running a business," Buffett said.
Since the acquisition, 3G has announced plans to eliminate roughly 2,000 jobs and close three manufacturing plants to improve efficiency. Buffett said he doesn't expect Berkshire to use 3G's approach, but the two may pair up on future deals and he expects Heinz profits to improve significantly.
Inevitably, there were rumblings about Berkshire's failure to beat the stock market in four of the past five years. Buffett said investors shouldn't have been surprised that Berkshire's results trailed the S&P 500 last year.
"We will underperform in very strong up years," Buffett said.
Shareholder Jack Lewis, from Holt, Missouri, said he's happy with Berkshire.
"Berkshire is the kind of stock that's not going to be a super growth stock," Lewis said. "It's going to be a stock that will continue to grow."
Buffett and Munger have said for several years that the massive size of Berkshire makes it impossible to match the investment gains that the company delivered decades ago.
"It's not a tragedy that you succeed so much that future returns go down," Munger said. "That's success."
Berkshire will keep looking for possible acquisitions, preferably large ones, to boost profits and use some of its roughly $49 billion in cash. Buffett reiterated Saturday that he'd be willing to sell stocks or even take on more debt if he needed more resources for a quality acquisition.
"If we see a really good $50 billion acquisition, we'll find a way to do it," Buffett said.
American businesses are doing great, Buffett said, and he doesn't see signs that a bubble is forming in bonds or any other assets even after years of interest rates near zero.
Retired salesman Robert Brillante made his first trip to the annual meeting from Washington D.C. this year to listen to Buffett and to experience the spectacle.
"He's always been my hero, so I figured I had to make the pilgrimage," said Brillante, as he stood a few feet away from a mob of admirers trying to get a glimpse of Buffett as he toured an exhibit featuring products from the companies owned by Berkshire Hathaway.
At one point, a pack of shareholders six-people deep followed Buffett throughout the exhibition hall while supermodel Kathy Ireland, the former Sports Illustrated model who sells products at Berkshire's Nebraska Furniture Mart, attracted a handful of fans a few feet away.
Roughly 97 percent of Berkshire Hathaway Class A and Class B shareholders rejected a proposal that would have encouraged the conglomerate to pay a dividend.
Buffett and the board had opposed the idea because they believe shareholders gain more if the cash is reinvested.
Berkshire owns roughly 80 subsidiaries, including clothing, furniture and jewelry firms. Its insurance and utility businesses typically account for more than half of the company's net income. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.
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Berkshire Hathaway Inc.: www.berkshirehathaway.com