Organization: Berkshire Hathaway Inc.

Year: 2020

Whereas: 0

Resolved: Resolved: Shareholders request that the Board of Directors of Berkshire Hathaway Inc. (Berkshire) adopt a policy for improving board and top management diversity (the Policy) requiring that the initial lists of candidates from which new management-supported director nominees and chief executive officers (CEOs) recruited from outside the company are chosen by the board or relevant committee (each, an Initial List) should include qualified female and racially/ethnically diverse candidates. The Policy should provide that any third-party consultant asked to furnish an Initial List will be requested to include such candidates.

Supporting Statement:Supporting StatementBerkshire appears to have no people of color among its directors and CEO.A growing body of empirical research indicates a significant positive relationship between firm value and the percentage of women and minorities in leadership. A 2012 Credit Suisse Research Institute study found that companies with one or more women directors delivered higher average returns on equity, better average growth and higher price/book value multiples.1 A 2015 McKinsey study found that corporate leadership in the top quartile for racial and ethnic diversity were 35 percent more likely to have financial returns above their national industry median.2Adopting a policy that requires consideration of women and minority candidates for every open director seat and external CEO search would assist the board in developing a diverse board and executive team. According to a 2016 Harvard Business Review study, including more than one woman or member of a racial minority in a finalist pool helps combat unconscious bias among interviewers and increases the likelihood of a diverse hire.3 We believe that all of our portfolio companies should have a robust diversity search policy in place to institutionalize the board's commitment to achieving and maintaining racial and gender diversity over the long term, including beyond the terms of the incumbent directors and CEO.The proposed rule resembles the Rooney Rule in the National Football League (NFL), which requires teams to interview minority candidates for head coaching and senior football operations openings and was recently expanded to include general manager jobs and equivalent front office positions. It does not dictate who should be hired, but instead widens the talent pool and requires a diverse set of candidates for consideration. While corporate boards may face differing circumstances, it is difficult to ignore the positive impact of the Rooney Rule on diversity. In the twelve years before the Rule was implemented, the NFL had four minority head coaches and one minority general manager. Twelve years after, the NFL had sixteen minority head coaches and eight minority general managers.4The Policy described in this Proposal would apply to only those CEO searches that consider candidates from outside Berkshire. We do not intend for the Policy to be a substitute for robust internal succession planning, and we encourage Berkshire to maintain and disclose a process for fostering a diverse talent pipeline for executive management.