Warren Buffett says he didn't fire Benjamin Moore's CEO because he spent company money on a yacht party in Bermuda for top executives at the Berkshire Hathaway subsidiary.
Dow Jones reports that in a June 21 letter he sent to Denis Abrams, Buffett wrote:
"The recent story coupling a top management convocation on a boat with the decision to make a management change at Benjamin Moore is completely false."
In fact, Buffett told the fired CEO that he would have had "no objection at all" to the party if he'd been asked beforehand and "there was no reason" to let him know about the event in advance.
Instead, Buffett writes, the decision was "based on a differing view about distribution channels and brand strategy... It was a decision of key importance and therefore one I needed to make."
Dow Jones says it got the letter from an Abrams representative and its authenticity has been confirmed by Buffett's assistant.
In a written statement to Dow Jones, Abrams says his departure "was about strategy and not performance."
In its story tying Abram's firing to the boat party, the New York Post said the event celebrated the company's first quarterly sales increase since 2007.
But it also reported company morale has been bad after Abrams fired sales executives and antagonized retailers by trying to "strong-arm them into exclusive distribution deals."
Even so, it's extremely unusual for Buffett to drop his usual "hands-off" policy and fire the CEO of a subsidiary.
Dow Jones' Market Talk quotes Buffett watcher Jeff Matthews as saying: "It is completely out of character for him to replace managers on the basis of strategy and ideas about distribution channels. It must have been something else seriously going wrong at the business."
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