Undecided Voters For SGM

[Parsad]

I just thought that since the vote is around the corner, I would help clarify a couple of points some have been debating on the various threads regarding the upcoming SGM.

 

Ultimately, shareholders should all decide what they are comfortable with, but long-term shareholders should realize that what Prem is doing isn't really any different than what Buffett is doing by donating significant shares to the Gates Foundation and his children's charitable trusts, as well as the intention to add Howard Buffett to the board of Berkshire.

 

The Watsa family's only duty as stewards of the "63 Foundation" is really to safeguard the culture of Fairfax, not unlike the Gates Foundation and Buffett's children's trusts.  None of the Watsa family will ever hold managerial or officer positions.  There are also measures and safeguards in place in the "63 Foundation" to ensure that Fairfax cannot become another family-run dynasty. 

 

While Buffett is doing all of this towards the end of his tenure, Prem and Fairfax still have another 20 years to go at least.  But Prem wanted to take care of these issues early before they became a problem, including the erosion of the multiple-voting shares if they continued to issue shares in acquisitions.

 

Another thing I would recommend that shareholders do, is to get to know the Watsa family.  You have the opportunity at the AGM every year.  The children are as courteous and humble as their parents...so fortunately, the apples did not fall far from the trees! 

 

Again, please vote your shares as your conscience dictates, just be aware that the measures in place will safeguard Fairfax's culture, like Berkshire's, well after Prem and Buffett are gone.  Cheers!

 

 

[bearprowler6]

I just thought that since the vote is around the corner, I would help clarify a couple of points some have been debating on the various threads regarding the upcoming SGM.

 

Ultimately, shareholders should all decide what they are comfortable with, but long-term shareholders should realize that what Prem is doing isn't really any different than what Buffett is doing by donating significant shares to the Gates Foundation and his children's charitable trusts, as well as the intention to add Howard Buffett to the board of Berkshire.

 

The Watsa family's only duty as stewards of the "63 Foundation" is really to safeguard the culture of Fairfax, not unlike the Gates Foundation and Buffett's children's trusts.  None of the Watsa family will ever hold managerial or officer positions.  There are also measures and safeguards in place in the "63 Foundation" to ensure that Fairfax cannot become another family-run dynasty. 

 

While Buffett is doing all of this towards the end of his tenure, Prem and Fairfax still have another 20 years to go at least.  But Prem wanted to take care of these issues early before they became a problem, including the erosion of the multiple-voting shares if they continued to issue shares in acquisitions.

 

Another thing I would recommend that shareholders do, is to get to know the Watsa family.  You have the opportunity at the AGM every year.  The children are as courteous and humble as their parents...so fortunately, the apples did not fall far from the trees! 

 

Again, please vote your shares as your conscience dictates, just be aware that the measures in place will safeguard Fairfax's culture, like Berkshire's, well after Prem and Buffett are gone.  Cheers!

 

 

 

Sanjeev---with the utmost respect---I cannot agree with your statement. I too am a very long time shareholder of Fairfax (initial shares bought in the mid 1990's). I stayed with the company through its darkest days and added to my aggregate shareholding throughout. Yes---my patience has been greatly rewarded. All the more reason why it pains me greatly to have to vote "No" against the Proposal at hand.

 

My concerns with the Proposal are best described on page 20 of the Management Proxy Circular that was sent to shareholders. The two issues outlined on that page are as follows:

 

1) The Amendment may prolong the period of time during which Sixty Two can exercise a controlling influence on most corporate matters; and

 

2) The Amendment may have an anti-takeover effect.

 

Detailed comments are provided for each of these items in the Circular.

 

These items are significant enough (to me) that I believe as a shareholder of subordinated voting shares that I should be compensated for these two items which are arising only as a result of the Proposal at hand. I do not believe that Prem's commitment to remain as CEO for at least another 10 years and to fix his compensation at its current level are adequate compensation. I respect that others may disagree with my view and vote for the Proposal however I could not.

 

 

 

[Jurgis]

Voted "For"

[Vizi1]

 

Sanjeev---with the utmost respect---I cannot agree with your statement. I too am a very long time shareholder of Fairfax (initial shares bought in the mid 1990's). I stayed with the company through its darkest days and added to my aggregate shareholding throughout. Yes---my patience has been greatly rewarded. All the more reason why it pains me greatly to have to vote "No" against the Proposal at hand.

 

My concerns with the Proposal are best described on page 20 of the Management Proxy Circular that was sent to shareholders. The two issues outlined on that page are as follows:

 

1) The Amendment may prolong the period of time during which Sixty Two can exercise a controlling influence on most corporate matters; and

 

2) The Amendment may have an anti-takeover effect.

 

Detailed comments are provided for each of these items in the Circular.

 

These items are significant enough (to me) that I believe as a shareholder of subordinated voting shares that I should be compensated for these two items which are arising only as a result of the Proposal at hand. I do not believe that Prem's commitment to remain as CEO for at least another 10 years and to fix his compensation at its current level are adequate compensation. I respect that others may disagree with my view and vote for the Proposal however I could not.

 

 

Read through the circular - Its The Sixty Two Investment Company - not 63 and not a foundation.

 

VOTED NO and sold 1/3 of my position and lived to tell the story.

 

While I disagree with Sanjeev on this, I do agree you should read the circular and then decide how you vote.

 

 

[StubbleJumper]

I've been a shareholder for 16 years.  I voted against.

[Parsad]

I just thought that since the vote is around the corner, I would help clarify a couple of points some have been debating on the various threads regarding the upcoming SGM.

 

Ultimately, shareholders should all decide what they are comfortable with, but long-term shareholders should realize that what Prem is doing isn't really any different than what Buffett is doing by donating significant shares to the Gates Foundation and his children's charitable trusts, as well as the intention to add Howard Buffett to the board of Berkshire.

 

The Watsa family's only duty as stewards of the "63 Foundation" is really to safeguard the culture of Fairfax, not unlike the Gates Foundation and Buffett's children's trusts.  None of the Watsa family will ever hold managerial or officer positions.  There are also measures and safeguards in place in the "63 Foundation" to ensure that Fairfax cannot become another family-run dynasty. 

 

While Buffett is doing all of this towards the end of his tenure, Prem and Fairfax still have another 20 years to go at least.  But Prem wanted to take care of these issues early before they became a problem, including the erosion of the multiple-voting shares if they continued to issue shares in acquisitions.

 

Another thing I would recommend that shareholders do, is to get to know the Watsa family.  You have the opportunity at the AGM every year.  The children are as courteous and humble as their parents...so fortunately, the apples did not fall far from the trees! 

 

Again, please vote your shares as your conscience dictates, just be aware that the measures in place will safeguard Fairfax's culture, like Berkshire's, well after Prem and Buffett are gone.  Cheers!

 

 

 

Sanjeev---with the utmost respect---I cannot agree with your statement. I too am a very long time shareholder of Fairfax (initial shares bought in the mid 1990's). I stayed with the company through its darkest days and added to my aggregate shareholding throughout. Yes---my patience has been greatly rewarded. All the more reason why it pains me greatly to have to vote "No" against the Proposal at hand.

 

My concerns with the Proposal are best described on page 20 of the Management Proxy Circular that was sent to shareholders. The two issues outlined on that page are as follows:

 

1) The Amendment may prolong the period of time during which Sixty Two can exercise a controlling influence on most corporate matters; and

 

2) The Amendment may have an anti-takeover effect.

 

Detailed comments are provided for each of these items in the Circular.

 

These items are significant enough (to me) that I believe as a shareholder of subordinated voting shares that I should be compensated for these two items which are arising only as a result of the Proposal at hand. I do not believe that Prem's commitment to remain as CEO for at least another 10 years and to fix his compensation at its current level are adequate compensation. I respect that others may disagree with my view and vote for the Proposal however I could not.

 

Everyone should vote as their conscience dictates, but I think you guys have missed a couple of points:

 

1) The Amendment may prolong the period of time during which Sixty Two can exercise a controlling influence on most corporate matters; and

 

Sixty-Two already controls Fairfax, and will never relinquish control of Fairfax.  They'll stop acquisitions through share issuances before they ever give up control. 

 

The reason being, Fairfax like Berkshire, has done particularly well over the years under this structure and this corporate culture.  This type of control could be tyrannical as we've seen with Biglari, or it could be successful and fair to shareholders as we've seen under Prem.

 

2) The Amendment may have an anti-takeover effect.

 

Neither Prem, nor Sixty-Two which already has control, will ever sell Fairfax...so there is no anti-takeover premium or effect.  Even back in the 1986 shareholder's letter, when it was still Markel, Prem stated that he would never sell:

 

"Why did we sell subordinate voting shares which have only one vote and retain multiple voting shares (10 votes) for ourselves?  Mainly because we wanted to control Markel Financial and manage the company to provide an above average long term return to shareholders.  Our multiple voting shares are not traded and can be sold in the public markets only as subordinate voting shares.  Also, a takeover offer for our shares, if accepted, immediately triggers a similar offer for all the common shares outstanding.  A Canadian Tire type of situation, which we find very distasteful, cannot and will not happen with Markel Financial.  However, we must add that it is extremely unlikely that we would sell our multiple voting shares even if an offer came in at 100% above the current market price.  Thus, our multiple voting shares prevent an investor from getting an attractive one time bonanza.  Our feeling though, is that for this short term pain, there could be some excellent long term gains.  Berkshire Hathaway, for example, has experienced an unbelievable increase in its share price from $20 in 1965 to $3500 currently.  Any takeover offer for Berkshire Hathaway, though attractive in the short run, would be hard pressed to match the long term returns that have been achieved.  For Berkshire Hathaway, this is a fact.  For us, it is only a goal!"

 

Boy did Prem deliver!  Cheers!

 

[ourkid8]

I have been a shareholder for 5+ years and I just voted against this proposal. 

[bearprowler6]

I just thought that since the vote is around the corner, I would help clarify a couple of points some have been debating on the various threads regarding the upcoming SGM.

 

Ultimately, shareholders should all decide what they are comfortable with, but long-term shareholders should realize that what Prem is doing isn't really any different than what Buffett is doing by donating significant shares to the Gates Foundation and his children's charitable trusts, as well as the intention to add Howard Buffett to the board of Berkshire.

 

The Watsa family's only duty as stewards of the "63 Foundation" is really to safeguard the culture of Fairfax, not unlike the Gates Foundation and Buffett's children's trusts.  None of the Watsa family will ever hold managerial or officer positions.  There are also measures and safeguards in place in the "63 Foundation" to ensure that Fairfax cannot become another family-run dynasty. 

 

While Buffett is doing all of this towards the end of his tenure, Prem and Fairfax still have another 20 years to go at least.  But Prem wanted to take care of these issues early before they became a problem, including the erosion of the multiple-voting shares if they continued to issue shares in acquisitions.

 

Another thing I would recommend that shareholders do, is to get to know the Watsa family.  You have the opportunity at the AGM every year.  The children are as courteous and humble as their parents...so fortunately, the apples did not fall far from the trees! 

 

Again, please vote your shares as your conscience dictates, just be aware that the measures in place will safeguard Fairfax's culture, like Berkshire's, well after Prem and Buffett are gone.  Cheers!

 

 

 

Sanjeev---with the utmost respect---I cannot agree with your statement. I too am a very long time shareholder of Fairfax (initial shares bought in the mid 1990's). I stayed with the company through its darkest days and added to my aggregate shareholding throughout. Yes---my patience has been greatly rewarded. All the more reason why it pains me greatly to have to vote "No" against the Proposal at hand.

 

My concerns with the Proposal are best described on page 20 of the Management Proxy Circular that was sent to shareholders. The two issues outlined on that page are as follows:

 

1) The Amendment may prolong the period of time during which Sixty Two can exercise a controlling influence on most corporate matters; and

 

2) The Amendment may have an anti-takeover effect.

 

Detailed comments are provided for each of these items in the Circular.

 

These items are significant enough (to me) that I believe as a shareholder of subordinated voting shares that I should be compensated for these two items which are arising only as a result of the Proposal at hand. I do not believe that Prem's commitment to remain as CEO for at least another 10 years and to fix his compensation at its current level are adequate compensation. I respect that others may disagree with my view and vote for the Proposal however I could not.

 

Everyone should vote as their conscience dictates, but I think you guys have missed a couple of points:

 

1) The Amendment may prolong the period of time during which Sixty Two can exercise a controlling influence on most corporate matters; and

 

Sixty-Two already controls Fairfax, and will never relinquish control of Fairfax.  They'll stop acquisitions through share issuances before they ever give up control. 

 

The reason being, Fairfax like Berkshire, has done particularly well over the years under this structure and this corporate culture.  This type of control could be tyrannical as we've seen with Biglari, or it could be successful and fair to shareholders as we've seen under Prem.

 

2) The Amendment may have an anti-takeover effect.

 

Neither Prem, nor Sixty-Two which already has control, will ever sell Fairfax...so there is no anti-takeover premium or effect.  Even back in the 1986 shareholder's letter, when it was still Markel, Prem stated that he would never sell:

 

"Why did we sell subordinate voting shares which have only one vote and retain multiple voting shares (10 votes) for ourselves?  Mainly because we wanted to control Markel Financial and manage the company to provide an above average long term return to shareholders.  Our multiple voting shares are not traded and can be sold in the public markets only as subordinate voting shares.  Also, a takeover offer for our shares, if accepted, immediately triggers a similar offer for all the common shares outstanding.  A Canadian Tire type of situation, which we find very distasteful, cannot and will not happen with Markel Financial.  However, we must add that it is extremely unlikely that we would sell our multiple voting shares even if an offer came in at 100% above the current market price.  Thus, our multiple voting shares prevent an investor from getting an attractive one time bonanza.  Our feeling though, is that for this short term pain, there could be some excellent long term gains.  Berkshire Hathaway, for example, has experienced an unbelievable increase in its share price from $20 in 1965 to $3500 currently.  Any takeover offer for Berkshire Hathaway, though attractive in the short run, would be hard pressed to match the long term returns that have been achieved.  For Berkshire Hathaway, this is a fact.  For us, it is only a goal!"

 

Boy did Prem deliver!  Cheers!

 

 

 

A few points of clarification:

 

Sixty Two does NOT currently control Fairfax. In Prem`s own words (please refer to his letter to the shareholders dated June 12, 2015 included in the Management Proxy Circular) he has EFFECTIVE control of Fairfax which is not control.

 

The excerpt from Prem`s 1986 letter---again in Prem`s own words: ``...it is extremely unlikely that we would sell our multiple voting shares...``. Extremely unlikely but not impossible.

 

My point---and I suspect the point of others who have voted against the Proposal (or are seriously considering voting against it) is quite simple. The shareholders of the multiple voting shares are gaining at the expense of the subordinated voting shareholders if the Proposal being considered passes and the subordinated voting shareholders are not being adequately compensated for what they are losing.

 

The Proposal being voted on is not a vote for or against Prem`s past performance (which has been superb) nor is it a vote for or against what we can expect from Prem in the future (which I suspect is also likely going to be stellar).

 

The Proposal at hand is one of valuation and compensation for lost shareholder rights or value---lost value of the existing subordinated voting shareholders. For that reason I voted NO after very careful consideration of all the information available to me.

 

 

 

 

 

 

[steph]

Fairfax is all about trust in the management. So it seems logical to vote 'yes'. The day you are really disappointed, the day you don't belief in this team anymore you just have to sell your shares.

[Alekbaylee]

I didn't get my proxy.

Mail service has been terrible in my area although urban) lately. :(

[StubbleJumper]

Fairfax is all about trust in the management. So it seems logical to vote 'yes'. The day you are really disappointed, the day you don't belief in this team anymore you just have to sell your shares.

 

 

Yes.  And long-time shareholders are saying that this proposal makes us trust management less.  And some long-time share holders actually did cut their position to reflect their lack of support for this.

[Alekbaylee]

weired. Just checked with my broker and they did not receive any proxy documentation form Fairfax to disseminate to their clients.

So here I am not able to make my voice heard.

Is anyone experiencing the same situation?

[Parsad]

weired. Just checked with my broker and they did not receive any proxy documentation form Fairfax to disseminate to their clients.

So here I am not able to make my voice heard.

Is anyone experiencing the same situation?

 

Hi Alek and anyone else who did not receive their proxy...its probably an error by Computershare. 

 

If you have not received your documents yet, or your broker has not received them yet, please contact Rick Salsberg, Vice President, Fairfax Financial Corporate Affairs at 416-367-4941. 

 

Cheers!

[Alekbaylee]

Thanks Sanjeev. My broker is supposed to check with them and get back to me tomorrow.

Hopefully I'd be able to vote YES.

Although there were times where I didn't agree with their decisions (i.e. FIBREK), the more I hold Fairfax (close to 15 years now) the more I like it and I trust their decisions. Prem is really an inspiring person IMO.

[Vizi1]

So it looks like its not just me who is not happy with Prem's plan.  If you cut and paste headline into any web  search  you can read the article.

 

http://www.wsj.com/articles/fairfax-canada-pension-plan-at-odds-over-ceo-voting-power-1437177062

[ourkid8]

I cannot see how anyone would support this plan. Prem, come on... put yourself in our shoes. You would also vote against it!!!

 

So it looks like its not just me who is not happy with Prem's plan.  If you cut and paste headline into any web  search  you can read the article.

 

http://www.wsj.com/articles/fairfax-canada-pension-plan-at-odds-over-ceo-voting-power-1437177062

[Jurgis]

I cannot see how anyone would support this plan. Prem, come on... put yourself in our shoes. You would also vote against it!!!

 

I fully support Prem.

[ourkid8]

I support Prem as well as Fairfax is the largest position in my portfolio however please refer to bearprowler6's note above. 

 

I cannot see how anyone would support this plan. Prem, come on... put yourself in our shoes. You would also vote against it!!!

 

I fully support Prem.

[Jurgis]

I support Prem as well as Fairfax is the largest position in my portfolio however please refer to bearprowler6's note above. 

 

I cannot see how anyone would support this plan. Prem, come on... put yourself in our shoes. You would also vote against it!!!

 

I fully support Prem.

 

bearprowler6's note above did not change my opinion or my vote.

[ourkid8]

http://finance.yahoo.com/news/fairfax-postpones-vote-aimed-protecting-173429560.html

 

TORONTO, July 20 (Reuters) - Fairfax Financial Holdings Ltd said on Monday it has postponed a special shareholders' meeting that had been called to vote on a change that would preserve Chairman and Chief Executive Prem Watsa's voting stake in the company he has built and run for more than three decades.

 

The Canadian financial-services company's vote, originally scheduled for July 21, has been postponed to Aug. 13.

 

Fairfax said in a statement that holders of a significant number of shares have not yet voted them and that the delay will allow them more time to do so. It said the postponement will allow Fairfax's management time to continue discussions with investors concerning the proposed amendment. It declined to provide further details.

 

"We encourage the numerous shareholders who have not yet voted on this proposed amendment to do so," said Watsa in the brief statement. "We believe that this amendment is in the best interests of Fairfax and its shareholders."

 

Watsa, a famed contrarian investor often dubbed "Canada's Warren Buffett," has increased Fairfax's common shareholders' equity from around $8 million in 1985 to $8.8 billion today. Its share price has soared from below C$5 in 1985 to more than C$660 on the Toronto Stock Exchange.

[StubbleJumper]

http://finance.yahoo.com/news/fairfax-postpones-vote-aimed-protecting-173429560.html

 

TORONTO, July 20 (Reuters) - Fairfax Financial Holdings Ltd said on Monday it has postponed a special shareholders' meeting that had been called to vote on a change that would preserve Chairman and Chief Executive Prem Watsa's voting stake in the company he has built and run for more than three decades.

 

The Canadian financial-services company's vote, originally scheduled for July 21, has been postponed to Aug. 13.

 

Fairfax said in a statement that holders of a significant number of shares have not yet voted them and that the delay will allow them more time to do so. It said the postponement will allow Fairfax's management time to continue discussions with investors concerning the proposed amendment. It declined to provide further details.

 

"We encourage the numerous shareholders who have not yet voted on this proposed amendment to do so," said Watsa in the brief statement. "We believe that this amendment is in the best interests of Fairfax and its shareholders."

 

Watsa, a famed contrarian investor often dubbed "Canada's Warren Buffett," has increased Fairfax's common shareholders' equity from around $8 million in 1985 to $8.8 billion today. Its share price has soared from below C$5 in 1985 to more than C$660 on the Toronto Stock Exchange.

 

WTF.  They don't have enough of the vote, so now they need to go shmooze some of the institutional holders to put them over the top?  How about just acknowledging that minority shareholders have rights and that we *won't* chuck Prem under the bus in just any capricious manner.  Like seriously, after all of these years, Prem's partners will cut him some slack, even if we think he's gone off the rails.  He doesn't need to increase the number of votes for the multiple voting shares, and this proposal borders on insulting. 

 

Given a few more weeks, I am virtually certain that Prem will convince a couple of the institutional shareholders to come to his side....

 

 

SJ

[Txvestor]

I voted my shares endorsing the increase in voting rights for Prem late last week. My reasoning was that he has always acted in shareholders interest and arguably even when that meant perhaps being content with less than he could personally otherwise get. Fairfax obviously means a lot more to him than money alone, and seems to me he is deeply desious of taking his shareholders and employees along for the ride than ride on them.

If there were a hypothetical $1000 offer on the table for fairfax, some posters seem like they might jump at it and rationalize etc. For those of us that think of the fairfax shares as permanent holdings that will serially compound for the next 15-20 yrs not so much. That buyout is the scenario that this eliminates.That is fine by me in the case of this owner/operator who has earned rather than grabbed at my trust.

[Vizi1]

 

WTF.  They don't have enough of the vote, so now they need to go shmooze some of the institutional holders to put them over the top?  How about just acknowledging that minority shareholders have rights and that we *won't* chuck Prem under the bus in just any capricious manner.  Like seriously, after all of these years, Prem's partners will cut him some slack, even if we think he's gone off the rails.  He doesn't need to increase the number of votes for the multiple voting shares, and this proposal borders on insulting. 

 

Given a few more weeks, I am virtually certain that Prem will convince a couple of the institutional shareholders to come to his side....

 

 

SJ

 

I am actually surprised this has happened.  I voted NO thought at least I got to vote as I assumed Prem lined up the votes before he put the circular in front of the public.  I also thought it didn't matter if CPPIB voted NO because the votes were due on July 17 to count for tomorrow and the WSJ published the article this weekend, so the article wouldn't have really influenced the vote of the retail shareholder, but I am glad to see the institutional holders weren't all sheep to Prem's proposal.

[Partner24]

Good news. FFH shareholders are not drinking the Kool-Aid!

 

Regarding the freeze of his 600 000$ compensation offer, there is nothing new. Just offering to keep walking the talk?:

 

So from 2000 onwards, my compensation will be a fixed salary of $600,000 with no bonuses. This compensation will not increase annually...Going forward, the only difference between me and you, our shareholders, will be my salary of $600,000

 

Prem Watsa, March 1 2001

 

 

 

 

 

 

 

 

 

[Alekbaylee]

If there were a hypothetical $1000 offer on the table for fairfax, some posters seem like they might jump at it and rationalize etc. For those of us that think of the fairfax shares as permanent holdings that will serially compound for the next 15-20 yrs not so much. That buyout is the scenario that this eliminates.That is fine by me in the case of this owner/operator who has earned rather than grabbed at my trust.

 

You nailed it Txvestor.

Some of us see themselves as true partners of Prem/Fairfax ala Berkshire and are here for the long run whereas other see their stake as just a mere investment in X company salable at the Y price.

Nothing wrong in that of course, just 2 different ways of thinking/investing. But Prem can't be blamed either to work more for the former than the latter. :)

Cheers