Berkshire Hathaway’s HomeServices of America, the biggest real estate brokerage in the country, is not part of what’s being called a landmark legal settlement over commissions announced this morning.
Massive real estate settlement doesn’t include Berkshire
Berkshire Hathaway’s HomeServices of America, the biggest real estate brokerage in the country, is not part of what’s being called a landmark legal settlement over commissions announced this morning.
In its news release, the National Association of Realtors says it “fought” to include all its member brokerages in the deal, but despite its efforts “agents affiliated with HomeServices of America and its related companies—the last corporate defendant still litigating the Sitzer-Burnett case—are not released under the settlement.”
In today’s settlement, the NAR will pay $418 million in damages, and more importantly, eliminate its rules on commissions.
Plaintiffs contended the NAR kept commissions artificially high by requiring, in effect, that agents for sellers split the money with agents representing buyers.
The NAR denies it did anything wrong and stresses that “cooperative compensation remains a choice” for consumers buying or selling a house.
In the U.S., commissions are generally in the range of 5% to 6%, compared to between 1% and 3% in many other countries, according to the New York Times.
It quotes one of the lawyers who worked on the settlement as saying, “The forces of competition will be let loose. You’ll see some new pricing models, and some new and creative ways to provide services to home buyers. It’ll be a really exciting time for the industry.”
CEO-designate Greg Abel’s compensation edges up 5% to $20 million
Greg Abel, the Berkshire vice chairman in charge on non-insurance operations who has been designated to eventually replace Warren Buffett as CEO, got a raise last year.
In a proxy statement filed late this afternoon for its upcoming annual shareholders meeting on May 4, Berkshire says Abel was paid a $20 million salary in 2023 with no additional bonus.
The year before, his salary was $16 million with a “[d]iscretionary bonus authorized by Mr. Buffett” of $3 million.
Ajit Jain, vice chairman of insurance operations, also received a $20 million salary with no bonus in 2023, up from the previous year’s $16 million salary plus $3 million bonus.
Buffett’s salary remained $100,000, the level it has been at for many years.
Based on figures in the filing, Barron’s estimates Berkshire bought back around $2.3 billion in stock in the first quarter through March 6. That signals an increase from the fourth quarter’s $2.2 billion.
Greg Abel at the 2021 Berkshire Hathaway shareholders meeting. CNBC
Shareholders are being asked to vote for 14 board members, down from last year’s 15. No one has been listed to replace Charlie Munger on the board.
They will also be voting on five shareholder proposals on climate change, diversity, equity and inclusion, railroad safety, and China.
The China proposal is from the conservative National Legal and Policy Center, which wants Berkshire to “provide shareholders with a sense of the Company’s reliance on activities conducted within, and under control of, the Communist Chinese government.”
It contends China is “a serial human rights violator, a geopolitical threat, and an adversary to the United States,” but Berkshire “does not seem to take the China threat seriously,” citing Munger’s call for the U.S. to “get along” with China so there can be “lots of free trade” to benefit both countries.
At last year’s meeting, NLPC Chairman Peter Flaherty was arrested and charged with trespassing for refusing to leave after his microphone was cut off when he insinuated Bill Gates was associated with Jeffrey Epstein’s sex trafficking of young women. He was speaking in favor of a proposal to separate Berkshire’s chairman and CEO roles. The charges were dropped by prosecutors a few weeks later.
The proxy statement says this year’s proposal will be presented by a different NLPC official.
Berkshire’s board is a recommending a “no” vote on all the shareholder proposals, generally arguing that the calls for action or reports are unnecessary.
Berkshire’s places biggest one-day satellite radio bet … so far
Berkshire Hathaway is stepping up its purchases of Liberty Media’s Sirius XM tracking stocks.
Filings earlier this week disclosed it bought more than 9.6 million shares for $288 million on Friday of last week through Tuesday this week.
It paid an average of $29.86 per share.
It’s the biggest three-day total since Berkshire started adding to its existing position at the beginning of the year, and it includes the biggest one-day purchase to date: $236 million on March 12.
Previously, Berkshire had not spent more than $50 million in a single day.
With the month only half over, Berkshire has purchased more than $395 million of the tracking stocks in March, compared to just $8 million in February and $259 million in January.
That’s a total of almost $663 million year-to-date for 22.1 million shares, an average price of $29.93.
The purchases have increased its position by 35% since the end of December.
Berkshire, and some hedge funds, appear to be buying the Sirius XM tracking stocks as a play on a reclassification exchange Liberty plans in this year’s third quarter.
It will give holders of the tracking stocks (LSXMA and LSXMK) 8.4 shares of Sirius XM Holdings (SIRI) for each tracking stock share.
Based on current prices, Berkshire would receive $2.9 billion of SIRI shares, for a 14.5% gain.
But SIRI shares have dropped almost 26% since the start of the year. If they continue to fall, Berkshire’s bet will become less lucrative, and the price gap could close completely.
GEICO avoids class-action suit over pandemic premium credits
GEICO will not be facing a class-action lawsuit over allegedly overcharging Illinois customers in the early months of the COVID-19 pandemic.
Reuters reports a federal judge ruled on Tuesday that “questions about calculating damages for individual drivers would ‘inevitably overwhelm’ questions common to the proposed class.”
Empty roads leading into and out of the Las Vegas strip, April 9, 2020. REUTERS/Shannon Stapleton
In April 2020, as the pandemic kept many drivers off the roads, reducing loss claims, GEICO gave customers a 15% credit at their next renewal.
Plaintiffs argued GEICO should have followed the lead of other auto insurers that were giving their customers partial refunds of premiums they had already paid.
