Following is the unofficial transcript of a CNBC interview with Berkshire Hathaway Chairman and CEO Warren Buffett on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today, Thursday, July 21st. Following are links to the interview on CNBC.com:http://video.cnbc.com/gallery/?video=3000536420 and http://video.cnbc.com/gallery/?video=3000536418.
All references must be sourced to CNBC.
ANDREW ROSS SORKIN: WE NOW HAVE WARREN BUFFETT WITH US. A BLUE RIBBON COMMISSION LEADERS FROM THE WORLD OF BUSINESS AND MONEY MANAGEMENT. THEY'VE BEEN MEETING A LITTLE BIT SECRETLY TO WORK TOGETHER TO DEVELOP WHAT THEY'RE CALLING A ROAD MAP FOR FIXING WHAT'S BROKEN IN THE BOARDROOMS OF CORPORATE AMERICA. IT'S A GROUP OF WHAT'S BEING CALLED THE COMMON SENSE PRINCIPLES. IT'S A FULL PAGE AD IN ABOUT EVERY NEWSPAPER TODAY. ALL ABOUT IT YOU CAN READ IT ONLINE. GOVERNANCE PRINCIPLES.ORG IS THE WEBSITE. WE'RE JOINED NOW BY ONE OF THOSE CEOS THAT HELPED DEVELOP SOME OF THE IDEAS ORIGINALLY WARREN BUFFETT BERKSHIRE HATHAWAY CHAIRMAN & CEO. GOOD MORNING TO YOU, WARREN.
WARREN BUFFETT: HI, ANDREW.
SORKIN: GREAT TO SEE YOU. HELP US UNDERSTAND HOW THIS HAPPENED. YOU KNOW, YOU LOOK AT THE SIGNATURES ON THE BOTTOM OF THIS AD. IT IS EVERYBODY FROM YOU, MARY BARRA, JAMIE DIMON, LARRY FINK, MARY ERDOES, JEFFREY IMMELT. HOW DID THIS COME TOGETHER?
BUFFETT: WELL, JAMIE INITIATED IT. HE GAVE ME A CALL AND GAVE THOSE OTHER PEOPLE A CALL PROBABLY A LITTLE MORE THAN A YEAR AGO. AND SUGGESTED THAT WE GET TOGETHER AND SEE IF WE COULD COME TOGETHER ON SOME GENERAL PRINCIPLES FOR CORPORATE GOVERNANCE THAT MIGHT HELP SHOW A PATHWAY TO THE FUTURE. CORPORATE GOVERNANCE HAS EVOLVED OVER THE YEARS. WE'VE GOT NEW CONSTITUENCIES THAT HAVE BECOME STRONGER LIKE ACTIVISTS AND SO ON. SO IT WAS AN ATTEMPT TO GET GENERAL AGREEMENT, NOT TOTAL AGREEMENT ON EVERY POINT. BUT GENERAL AGREEMENT ON SOME PRINCIPLES THAT WOULD BE USEFUL IN CORPORATE GOVERNANCE.
SORKIN: ONE OF THE FIGURES THAT JAMIE DIMON OFTEN CITES WHEN TALKING ABOUT SORT OF THE -- I DON'T KNOW IF YOU WANT TO CALL IT A BROKEN PUBLIC MARKET. THE FACT THAT BACK IN 1996 THERE WERE 8,025 PUBLICLY LISTED COMPANIES IN THE UNITED STATES BY 2012 THIS ACCORDING TO THE NATIONAL BUREAU OF ECONOMIC RESEARCH, IT WAS IN HALF. 4,101. SO MANY COMPANIES EITHER TAKEN PRIVATE, PEOPLE DELAYING, GOING PUBLIC. OF COURSE MERGERS AND THE LIKE THAT MAY HAVE LED TO THAT. BUT WHAT DO YOU THINK IS HAPPENING? WHY ARE WE AT THIS POINT IN TIME? THIS STATE OF AFFAIRS?
BUFFETT: WELL, THERE'S TWO WAYS COMPANIES DISAPPEAR. THEY EITHER GET BOUGHT OR THEY GO BROKE. AND I DON'T THINK THAT MANY HAVE GONE BROKE. SO IT'S BEEN A PERIOD OF AMALGAMATION, MERGERS AND AS YOU SAY SOME GOING PRIVATE ALTHOUGH FREQUENTLY BECOME PUBLIC AGAIN. BUT MARKETS GO WHERE MONEY AND PEOPLE'S DESIRES LEAD THEM. SO I THINK THAT'S BEEN A -- IT'S BEEN SORT OF A NATURAL EVOLUTION, I WOULD SAY.
SORKIN: A COUPLE OF THE SUGGESTIONS, RECOMMENDATIONS. AND I KNOW THESE ARE NOT ABSOLUTE. BUT PERHAPS THE BIGGEST ONE, YOU DON'T THINK THAT A COMPANY NECESSARILY NEEDS TO PROVIDE GUIDANCE.
BUFFETT: YEAH. I LIKE THAT ONE. I THINK THAT -- I THINK THAT GUIDANCE CAN LEAD TO A LOT OF MALPRACTICE. IT DOESN'T HAVE TO, BUT I THINK IF THE CEO GOES OUT AND SAYS WE'RE GOING TO EARN $1.06 NEXT QUARTER, I THINK IF THEY'RE GOING TO COME IN AT $1.04 THERE'S A LOT OF ATTEMPTS TO FIND A COUPLE OF EXTRA PENNIES SOME PLACES. IT DOESN'T NECESSARILY HAVE TO BE THE CEO. SOMETIMES SUBORDINATES. I MEAN SUBORDINATES THEY WANT THEIR CHIEF TO LOOK GOOD. AND THERE ARE WAYS THAT YOU CAN MOVE EARNINGS TOWARD THE END OF A QUARTER. SOMETIMES EVEN AFTER THE END OF A QUARTER AND I THINK THE GUIDANCE -- I'VE SEEN GUIDANCE PRODUCE SOME BAD RESULTS.
SORKIN: HOW HARD WAS IT TO PERSUADE OTHERS IN THE ROOM THAT THAT'S THE RIGHT ANSWER? AND THE REASON I ASK IS YOU HAVE THE HEADS OF EVERYTHING FROM VANGUARD IN THE ROOM TO T. ROWE PRICE YOU HAVE AN ACTIVIST IN THE ROOM IN JEFFREY UBBEN FROM VALUEACT CAPITAL .
BUFFETT: WE DIDN'T -- WE DIDN'T NECESSARILY COME TO UNITY ON EVERY POINT. I BELIEVE WE POINT THAT OUT THE BEGINNING OF OUR STATEMENT. THAT THERE ARE A VARIETY OF COMPANIES THAT MAY HAVE DIFFERENT CONSTITUENCIES. THAT MAY OPERATE UNDER DIFFERENT PRESSURES, MAY HAVE DIFFERENT BELIEFS ABOUT IT. SO THIS IS NOT SAYING THAT IF YOU DON'T DO THIS, YOU'RE DEAD WRONG OR ANYTHING OF THE SORT. BUT IT WAS -- IT WAS TO GIVE ENCOURAGEMENT TO COMPANIES THAT REALLY FELT UNEASY ABOUT GIVING GUIDANCE TO PERHAPS HAVE A LITTLE MORE BACKBONE ABOUT IT. I PERSONALLY THINK THAT'S A VERY GOOD RECOMMENDATION. I DON'T THINK IT SHOULD BE MANDATORY.
SORKIN: I KNOW THE GOAL OF THIS IN PART IS TO STIR CONVERSATION IN THE BUSINESS COMMUNITY. IS THIS ANY LIKE THE GIVING PLEDGE IN THAT ARE YOU HOPING OTHERS SIGN UP TO IT? OR IS THIS SOMETHING MORE ABOUT CREATING A DIALOGUE.
BUFFETT: IT'S CREATING A DIALOGUE. THIS IS NOT SOMETHING WE'RE GOING TO BE PASSING ALONG AND HOPING WE GET HUNDREDS OF SIGNATURES OR ANYTHING OF THAT SORT. IT'S A DIALOGUE AND IT'S CERTAINLY -- WE WELCOME OTHER VIEWS ON IT. IT'S -- THESE ARE NOT – THESE DID NOT COME DOWN ON A TABLET, YOU KNOW? FROM THE MOUNTAIN OR ANYTHING OF THE SORT.
SORKIN: ONE OF THE MORE INTERESTING RECOMMENDATIONS IN MY MIND WAS THE ONE AROUND DUAL CLASS VOTING SHARES. AND THE IDEA THAT YOU'RE NOT NECESSARILY AGAINST IT. BUT TO THE EXTENT THAT COMPANIES DO HAVE DUAL CLASS, YOU THINK AT SOME POINT IT SHOULD SUNSET? HOW SHOULD THAT WORK? AND DO YOU THINK THAT WILL BE ADOPTED? HAVE YOU HEARD FROM ANYBODY YET ON THAT? THERE'S A NUMBER OF BIG ONES AND I KNOW YOU HAVE SOME FRIENDS WHO HAVE THEM.
BUFFETT: WELL, NOT ONLY FRIENDS. WE HAVE A DUAL CLASS AT BERKSHIRE.
SORKIN: YES, YOURSELF. YES.
BUFFETT: AND WHEN I BOUGHT INTO "THE WASHINGTON POST" 40-45 YEARS AGO OR SO, THEY HAD A DUAL CLASS STRUCTURE. AND THE INITIAL LETTER I WROTE TO KAY GRAHAM, I SAID, I HAPPEN TO WELCOME IT BECAUSE I THOUGHT THERE ACTUALLY WAS SOME VALUE TO SOCIETY TO HAVING "THE WASHINGTON POST" CLEARLY CONTROLLED BY THE GRAHAM FAMILY FOR DECADES TO COME AND NOT FOR IT BEING SUBJECT TO A TAKEOVER. IN OUR OWN CASE, AS I'D GIVE AWAY MY OWN SHARES, AND I'VE GIVEN AWAY ABOUT 40% SO FAR AND I'LL GIVE AWAY EVERY SHARE I HAVE, I ALWAYS CONVERT THE VOTING STOCK INTO THE "A" STOCK INTO THE "B" STOCK. SO THE "A" STOCK WILL HAVE LESS PROPORTIONATELY AS IT GOES ALONG AND WE ALSO HAVE A PROVISION THAT IN THE EVENT OF ANY KIND OF A CORPORATE TRANSACTION, THE "A" STOCK CANNOT GET TREATED DIFFERENTLY THAN THE "B" STOCK. I THINK THAT'S IMPORTANT AND WE PUT THAT IN OUR PAPER. ADDITIONALLY, WE'VE GOT IT FOR 20 YEARS AND THE "A" AND "B" STOCK HAVE ALWAYS SOLD RIGHT AT PARITY. BUT I GENERALLY THINK THAT ON BALANCE I THINK IT'S BETTER TO HAVE ONE CLASS OF STOCK.
SORKIN: HOW MUCH OF THIS CONVERSATION IS BEING DRIVEN BY ALL OF THESE CORPORATE GOVERNANCE EXPERTS AND ISS AND THE LIKE AND THE RISE OF ACTIVISM?
BUFFETT: WELL, I DON'T THINK IT WAS EXACTLY DRIVEN BY THAT, BUT IT CERTAINLY HAS TO BE ADDRESSED. I MEAN, THE QUESTION OF WHETHER MAJOR INSTITUTIONAL INVESTORS SHOULD SORT OF QUITCLAIM THEIR BEHAVIOR AS OWNERS TO THE ADVICE OF SOME OUTSIDE ORGANIZATION, WE SPENT A LOT OF TIME TALKING ON THAT. AT BERKSHIRE, WE CERTAINLY THINK WE OUGHT TO VOTE THE STOCK AS WE BELIEVE AND WE DO NOT USE CONSULTANTS OR ADVISORY ORGANIZATIONS TO DIRECT OUR VOTE. SO I LEAN AWAY FROM PEOPLE HAVING SOMEONE ELSE TELL THEM HOW TO VOTE.
SORKIN: CAN YOU TAKE US INSIDE THE ROOM FOR A SECOND? WHAT WAS THE BIGGEST POINT OF CONTENTION?
BUFFETT: WELL, WE CERTAINLY DISAGREED ON A NUMBER OF THINGS. IT WAS A VERY PLEASANT DISCUSSION. THEY LASTED, I THINK WE HAD THREE OF THEM THAT LASTED SOMEWHERE BETWEEN THREE AND FOUR HOURS EACH. AND YOU KNOW, I THINK ALMOST EVERYTHING YOU'LL SEE IN THAT WE HAD SOME DISCUSSION WITH PEOPLE MAYBE DISAGREEING WITH A PART OF IT AS IT WAS ORIGINALLY WRITTEN. BUT I CAN'T THINK OF ANYTHING WE GOT IN ANY FISTFIGHTS OVER.
SORKIN: WOULD YOU PREFER TO BE A PRIVATE COMPANY TODAY? I MEAN, ONE OF THE BIG ISSUES IS THAT WHEN YOU TALK TO CEOs TODAY THEY ALL SAY THEY MUCH PREFER TO BE OUTSIDE OF THE GLARE, IF YOU WILL, OF THE PUBLIC SPOTLIGHT.
BUFFETT: YEAH LISTEN, I'VE HAD AN INTERESTING TRANSFORMATION ON THAT. I ORIGINALLY WOULD HAVE PREFERRED BERKSHIRE HATHAWAY TO BE A PRIVATE COMPANY. AND OVER THE YEARS, MY VIEW ON THAT'S CHANGED 180 DEGREES. I ENJOY HAVING BERKSHIRE BEING A PUBLIC COMPANY. I ENJOY HAVING – I DON'T KNOW WHETHER WE HAVE A MILLION SHAREHOLDERS OR EVEN MORE – BUT I LIKE THE FACT THAT PEOPLE PUT THEIR TRUST IN US AND THAT WE TREAT THEM LIKE PARTNERS AND THEY FEEL LIKE PARTNERS. SO I ENJOY BEING A PUBLIC COMPANY NOW. BUT IF YOU ASKED ME THAT QUESTION 40 YEARS AGO, I WOULD HAVE SAID I'D RATHER BE PRIVATE.
SORKIN: I WANT TO TRY OUT AN IDEA ON YOU. THERESA MAY, PART OF HER PLATFORM IN THE UK IS ENCOURAGING WHAT SHE CALLED WORKER DIRECTORS THAT AREN'T CUT FROM THE SAME SOCIAL CIRCLE AS CURRENT BOARD MEMBERS TO BE ON BOARDS. WHEN PEOPLE TALK ABOUT DIVERSITY ON BOARDS, USUALLY IT'S OTHER CEOs. WHAT DO YOU THINK ABOUT REALLY CHANGING THAT UP? DOES THAT MAKE SENSE?
BUFFETT: WELL, IN CERTAIN COUNTRIES THEY HAVE VARIOUS WAYS OF WORKERS PARTICIPATING. I THINK MAYBE ONE TIME EVEN IN THE PAST IN THE AUTO INDUSTRY, THEY AGREED TO PUT A UAW MEMBER ON – MAYBE IT WAS THE CHRYSLER BOARD – THAT'S A LONG TIME AGO. BUT NO, I BELIEVE THAT THE BOARD OF DIRECTORS IS THERE TO REPRESENT SHAREHOLDERS, THE OWNERS. AND I THINK THAT YOU SHOULD HAVE PEOPLE THAT THEIR PRIMARY ALLEGIANCE IS TO THE OWNERS OF THE COMPANY.
JOE KERNEN: THAT'S A GREAT INTERVIEW WITH ANDREW. WARREN, ON A PERSONAL NOTE, I JUST WANT TO THANK YOU FOR NOT SENDING ME THAT DAIRY QUEEN CARD. BECAUSE I DON'T NEED THAT. I REALLY DON'T. YOU KNOW, YOU WERE GOING TO SEND ME THAT THING WHERE I COULD GET SOME – I DON'T NEED IT AND I THINK YOU THOUGHT ABOUT THAT. THE LAST THING I NEED IS DAIRY QUEEN STUFF SO THANK YOU FOR NOT SENDING IT.
BUFFETT: JOE, I WILL TAKE THAT AS A REQUEST. I'LL TEND TO IT IMMEDIATELY.
KERNEN: NO, NO, I MEAN IT. DON'T. I THINK YOU WERE GOING TO, BUT I DON'T THINK I – WHO NEEDS A DAIRY QUEEN CARD AT OUR AGE OR – WELL, YOU CAN WORK IT OFF. BUT IT'S JUST TOO MUCH WORK, WARREN. I MEAN, I JUST FEEL LIKE I GOT TO –
BUFFETT: OKAY.
KERNEN: NO, DON'T DO IT. MAYBE ANOTHER BRICK.
BUFFETT: OH, ANOTHER BRICK IS ON THE WAY.
KERNEN: ANOTHER BRICK IN THE WALL. SOMEONE SAID THAT ONCE.
SORKIN: OK. WE WANT TO THANK JOSEPH FOR THE DAIRY QUEEN QUESTIONS.
KERNEN: IT WASN'T REALLY A QUESTION.
SORKIN: I WILL TAKE YOU TO DAIRY QUEEN.
KERNEN: NO. I'M SERIOUS. I DON'T WANT ANY SEE'S CANDY –
SORKIN: I WILL PERSONALLY DO IT. WARREN, WE WANT TO THANK YOU FOR – GO AHEAD.
BUFFETT: JOE, I WOULD HATE TO TEST JOE WITH A NETJETS CARD.
KERNEN: YOU SAID YOU'D SEND ME ONE, IT JUST WOULDN'T BE GOOD FOR ANYTHING. I KNOW.
BUFFETT: WELL, IT'S GOOD FOR TARMAC HOURS.
KERNEN: I COULD USE IT AT LIKE IF I EVER GO OUT TO A NIGHTCLUB AGAIN. I COULD JUST LIKE, OH WHAT IS THAT? THAT'S MY NETJET CARD. I'M SORRY.
SORKIN: THAT'LL WORK.
BUFFETT: YOU'LL GET FURTHER WITH THAT THAN A DAIRY QUEEN CARD IN A NIGHTCLUB.
SORKIN: YEAH. HEY WARREN, THANK YOU FOR JOINING US THIS MORNING. FOR THE VIEWERS WHO WANT TO CHECK OUT WHAT THESE GUYS HAVE BEEN WORKING ON IT'S GOVERNANCEPRINCIPLES.ORG AND WE APPRECIATE YOU JOINING US THIS MORNING. THANKS.
BUFFETT: THANKS TO BOTH OF YOU.
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