Warren Buffett is doing a ‘disservice’: Attorney

Boards' obligation to push back

Billionaire investor Warren Buffett admitted he doesn't like to say no to corporate boards when it comes to compensation plans, but does he have an obligation to speak up?

"Mr. Buffett's doing a disservice if he is on a board or as large shareholder isn't pushing back to get the most out of management," attorney Stuart Grant told CNBC's "Power Lunch" on Thursday.

In a live interview with CNBC on Wednesday, Buffett admitted that he sometimes has a hard time saying no to pay plans at company board meetings.

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"Taking on a (compensation) committee is a little bit like belching at the dinner table... You can't do it too often. If you do, you find you're eating in the kitchen pretty soon."

Warren Buffett
Adam Jeffery | CNBC

On Wednesday, Berkshire Hathaway abstained from a controversial vote on Coca-Cola's equity compensation plan, despite Buffett calling the plan "excessive."

The plan was approved despite an effort by activist investor David WInters to have shareholders reject it. WInters has said it would erode the per-share value of Coca-Cola stock and reward executives with shares that have an approximate price of $13 billion

Buffett said his reason for abstaining was simple. "I love Coke. I love the management, I love the directors … so I didn't want to vote no. It's kind of un-American to vote no at a Coke meeting."

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Grant, a lawyer who has represented shareholders against boards, said shareholders and boards have an obligation to stand up to company management.

"One of the great things about this country has been balance of power," Grant said. "That's exactly what a board needs to do with management. Boards need to be able to say no, boards need to be able to push back."

When boards don't do their jobs, well, that's when activist investors can move in.

"A well-functioning board that pushes back on management, that challenges, that offers alternatives without micromanaging … are the companies least likely to come under attack by activist investors."

By CNBC's Michelle Fox