An excerpt from Karen Linder’s ‘The Women of Berkshire Hathaway’
About the Author: Karen Linder is the author of "The Women of Berkshire Hathaway: Lessons from Warren Buffett's Female CEOs and Directors," which debuts debuts this weekend at the Berkshire Hathaway annual shareholder’s meeting in Omaha and which SPN covered on Friday. The following is an excerpt from the introduction to that book. For more on Linder, see the note that follows this post.
People pack Omaha's CenturyLink Center each year for Berkshire Hathaway's shareholder's meeting. It was at the meeting that Karen Linder found the inspiration for her book.
I’ve attended the Berkshire Hathaway annual shareholder’s meeting in Omaha, Nebraska, for the past few years and always get there early (or send my husband early) to be able to secure seats in the main arena of the 19,000-seat CenturyLink Center. The 2011 attendance was 40,000, so getting there by 6:30 a.m. is important, lest you be relegated to the folding chairs and bleachers watching simulcast monitors in the exhibit hall or across the street in a ballroom of the Hilton Hotel.
Doors open promptly at 7 a.m. to long lines of people, some of whom slept on the sidewalk outside overnight. If you didn’t know better, you’d think they were waiting in line for a rock concert. The meeting always begins with the Annual Meeting Movie at 8:30 a.m. Yes, people sit in their precious seats for an hour and a half with absolutely nothing to do except laugh at the people who didn’t stand in line outside the convention center and are now running up and down steep auditorium steps hoping to find two open seats together.
The movie is different each year, lasts for about an hour, and is a great mix of comedy and promotion. At the end of the movie, a scrolling horizontal row of Berkshire Hathaway managers’ portraits lists their names and companies while music of modified lyrics to the tune of “My (Our) Favorite Things” plays in the background.
As I watch this video each year, I see the headshot photos of the more than 80 Berkshire company managers scroll by and wonder, “Why are they all men?” Actually, they aren’t all men. There are currently four women who manage Berkshire Hathaway companies: Marla Gottschalk of Pampered Chef, Susan Jacques of Borsheim’s Fine Jewelry, Beryl Raff of Helzberg Diamonds, and Cathy Baron Tamraz of Business Wire. During this video, the photos of these four women appear like remote islands in a vast sea of men. It made me wonder what made these particular women so unique and if this proportion of female leadership is typical in all of corporate America.
Berkshire Hathaway Managers
As of January 2012, a record high of 18 women (3.6 percent) hold CEO positions of a Fortune 500 company. Berkshire’s current ratio of female CEOs is higher than that at 5.1 percent, increasing from just one female CEO in 2001. However, the female CEOs that run Berkshire subsidiaries are not responsible for companies as large as those in the Fortune 500. When they are compared to companies of equal budget size as themselves, they have a very similar proportion of female CEOs.
Of the seven CEOs profiled in this book, four (Blumkin, Christopher, Tamraz, and Graham) were already in place as CEO at the time of acquisition by Berkshire Hathaway. Berkshire has never acquired a company and let go of the existing management team. Jacques and Raff both succeeded male CEOs after Berkshire acquisition.
It can be argued that Berkshire’s subsidiary company Pampered Chef is at the forefront of the female-dominated industries of at-home parties and kitchen utensils and so having a woman CEO is not exceptional. That is a fair argument. The company was founded by Doris Christopher. She was succeeded as CEO by Marla Gottschalk. It is very unlikely that a man will soon hold the position of CEO of Pampered Chef.
One might also suggest that the jewelry business, including Borsheims and Helzberg Diamonds, is a woman’s industry, since women own and wear significantly more jewelry than men. In this case, the argument is simply wrong. Historically, jewelers and gem experts have been male. It was only in the past 30 years that women began to enter professions in the jewelry industry. The Women’s Jewelry Association was formed in 1983 to help further the careers of women in the jewelry and watch industries.
The male-dominated American furniture industry began in the southern United States. Nebraska Furniture Mart, founded by Rose Blumkin in 1937, is an anomaly in the industry.
Business Wire is a service company for public relations and investor relations. There is significant female representation in the area of public relations, but not so in the realm of investor relations.
Newspapers are traditionally led by men. Berkshire Hathaway is the majority shareholder of the Washington Post Company, but does not own it outright. Katharine Graham’s father purchased the Washington Post when she was 16 years old. Her husband took over running it from her father and she inherited the CEO position only after the death of her husband. Of some interest is that there are at least three women who claim to be the first female publisher in the United States, all in the 1700s, and each succeeded to the post after the deaths of their perspective spouses.
Berkshire Hathaway Directors
Berkshire Hathaway has been listed as having one of the three best boards of directors in America, along with Amazon and Johnson & Johnson. Women comprise 16.1 percent of U.S. Corporate board seats. The board of directors for Berkshire Hathaway has 2 seats out of 12 (16.67 percent) occupied by women: Charlotte Guyman, since 2003, and Susan Decker, since 2007. Until her death in 2004, Susan T. Buffett, wife of Warren, was a member of the board. There are two female officers (out of eight) of Berkshire Hathaway: Sharon L. Heck, vice president, and Rebecca K. Amick, director of internal auditing.
It’s interesting and a bit humorous to learn what Berkshire directors are paid to serve on the board. It is a mere pittance compared to typical board member compensation for large corporations. In 2010, the Berkshire board members were all paid $2,700. Three members of the Audit Committee were paid an additional $4,000. The method of compensation is defined such that each director receives a fee of $900 for each meeting attended in person and $300 for participating in any meeting conducted by telephone. A director who serves as a member of the Audit Committee receives a fee of $1,000 quarterly. Directors are reimbursed for their out-of-pocket expenses incurred in attending meetings of directors or shareholders.
This is far less than the hundreds of thousands of dollars some board seats pay. For example, Stephen Burke’s compensation as a Berkshire Hathaway board member in 2010 was $2,700. His total compensation in stocks and cash in 2009 as a board member of JP Morgan Chase & Company was $245,000.
The current Berkshire Hathaway board members have significant personal financial interest in the welfare of the company. The total value of stock holdings for the 11 board members, aside from Warren Buffett is just over $10 billion. The average stock ownership of those eleven members is roughly $910 million ranging from $425,000 to $6.4 billion, as of September 2011. Granted, that average is influenced by extraordinarily large stock holdings by Bill Gates and David Gottesman. But every member of the board holds in excess of $7 million worth of Berkshire stock, with the exception of the two most recent additions to the board: Susan Decker and Stephen Burke, who joined in 2009.
The directors all purchased their Berkshire Hathaway stock from personal funds. No stock options have ever been given to a director. As Buffett says, “All eleven directors purchased their holdings in the market just as you did; we’ve never passed out options or restricted shares. Charlie and I love such honest-to-God ownership. After all, who ever washes a rental car?”
The average age of the 12 members of the board of Berkshire Hathaway is 70. Six members are over the age of 80. These directors will have to face board succession issues, as well as CEO succession issues, over the next few years.
The profiles presented in this book illustrate that there is no single “recipe for success”. These women come from variable social, economic, and educational backgrounds. In general, they would be characterized as coming from a hardworking middle-class upbringing. The exceptions to this are Katharine Graham, born into a life of privilege, and Rose Blumkin, born into extreme poverty.
Many factors contribute to who these women are at the pinnacle of their careers and the valuable lessons they learned along the way. This book travels the paths that led nine women to succeed in positions traditionally held by men and tells the stories of their working relationships with professional colleagues and Warren Buffett. They share how they balance work and private lives, the lessons they learned along the way and how they are cultivating a new corporate environment.
Credits: Photo from mikebaudio on Flickr
About the author: Karen Linder was raised in Lincoln and now lives in Omaha and Montecito, Calif. She has spent over 25 years as a Cytotechnologist, studying cells, and has written numerous medical scientific journal articles and books.
Linder is a Berkshire Hathaway shareholder and founder and president of Linspiration, Inc. She is an entrepreneur and a member of the Nebraska Angels and Women Investing in Nebraska (WIN). She is a former small business owner and former faculty at the University of Nebraska Medical Center. She serves on the boards of two arts nonprofits and one startup.