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 Mr. Buffett and Berkshire vice chairman Charlie Munger, who faced tough questions about Berkshire's prospects for growth and acquisitions, including the takeover of ketchup-maker H.J. Heinz Co.
Mr. Buffett defended joining with investment firm 3G Capital last year to buy Pittsburgh-based Heinz. That $23.3 billion deal represents a shift in Mr. 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," Mr. Buffett said.
Since the acquisition, 3G has announced plans to eliminate roughly 2,000 jobs and close three manufacturing plants to improve efficiency. Mr. 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.
Stockholders also asked how Mr. Buffett came to handle a vote on pay packages crafted for Coca-Cola executives, a company in which Berkshire holds a major stake.
Mr. Buffett abstained from voting Berkshire's 400 million shares against the compensation plan last week, though 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," Mr. Buffett said Saturday.
He said he told Coke's CEO privately that he opposed the compensation plan but that he 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," Mr. Buffett said.
Shareholder Jake Kamm said the explanation Mr. Buffett offered initially for not voting against the pay package was not convincing.
"It's a little bit of spin," said Mr. Kamm, who teaches finance at Baldwin Wallace University near Cleveland.
Mr. Buffett said the true test will come when Coke reveals its pay packages over the next year.
Mr. 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 upon Warren Buffett's departure. But the elder Mr. Buffett said Berkshire shareholders shouldn't worry about his preference that his son one day become Berkshire's chairman.
Inevitably, there were rumblings about Berkshire's failure to beat the stock market in four of the past five years. Mr. 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," Mr. Buffett said.
Mr. Buffett and Mr. 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," Mr. 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. Mr. Buffett reiterated Saturday that he would 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," he said.
American businesses are doing great, Mr. 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.
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.
Mr. 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 and Wells Fargo & Co.