Buffett Says He'll Leave Salomon As Soon As Bond Probes Are Ended

Posted: March 26, 1992

NEW YORK — Warren E. Buffett, the billionaire investor who took over Salomon Inc. last year after it admitted widespread bond-trading violations, said yesterday that he would step down after government investigations of the firm were completed.

Buffett had planned to relinquish management of the firm's brokerage unit, Salomon Bros. Inc., but the announcement ended speculation that he would stay as chairman and chief executive of the parent company.

"I am not, beyond that point, a candidate for this job," Buffett said in a letter to shareholders contained in Salomon's annual report.

Also yesterday, the company said that former chairman John H. Gutfreund, who resigned in disgrace last August amid the bond scandal, had asked Salomon for more than $14 million in back pay, severance benefits and rights to stock. The company already has paid Gutfreund $1.14 million for his work last year.

Three other former top executives, all of whom also were forced to quit in the scandal, have made "comparable" claims, Salomon said. Former president Thomas W. Strauss has asked for cash and stock now worth a total of about $15 million, it said.

In his letter to shareholders, Buffett, 61, did not announce a planned successor as chairman and CEO of Salomon Inc., or a timetable for his departure. However, investigations by several agencies into criminal and civil wrongdoing at Salomon are expected to be completed within a few months.

Buffett did say he would recommend to Salomon's board that Deryck C. Maughan, chief operating officer of Salomon Bros., be nominated as chief executive of the subsidiary.

In the seven months since taking over Salomon, Buffett has overhauled the firm's management and slashed payouts to professionals. Scores of executives have defected and Salomon has struggled to regain lost clients and business.

Salomon Bros. earned just $27 million in 1991's fourth quarter, a poor performance during an otherwise booming time on Wall Street that reflected the firm's difficulties.

Salomon is being investigated by the Justice Department, Securities and Exchange Commission and other agencies. The firm last August admitted a series of illegal actions in bidding for government securities.

Buffett is known as the "Oracle of Omaha" for his astute decisions made through his investment company, Berkshire Hathaway Inc.

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