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Hold CEOs, boards responsible for problems in firms: Buffett

business Updated: Feb 28, 2010 14:22 IST

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Billionaire investor Warren Buffett, whose Berkshire Hathaway recorded 61 per cent rise in full-year profit largely due to gains from derivatives investments, has said that CEOs and boards of the companies should be penalised for failing in their job.

The company's net earnings surged to USD 8.06 billion at the end of December 31, from USD 5 billion at the end of 2008, Berkshire said in its 2009 annual report.

In a letter to the shareholders, Buffett said: "A board of directors of a huge financial institution is derelict if it does not insist that its CEO bear full responsibility for risk control.

"If he's incapable of handling that job, he should look for other employment. And if he fails at it – with the government thereupon required to step in with funds or guarantees –the financial consequences for him and his board should be severe," he added.

The company's net earnings rose to USD 3.06 billion in the fourth quarter ended December 31, from USD 117 million in the corresponding period a year ago, the annual report said.

"We are delighted that we hold the derivatives contracts that we do. To date we have significantly profited from the float they provide. We expect also to earn further investment income over the life of our contracts," the report added.