Who will replace Warren Buffet as the Head of Berkshire Hathaway financial conglomerate?
Warren Buffett exudes a relaxed mood after his time at Berkshire Hathaway has come to an end. The billionaire chief executive of the $720 billion insurance and investment conglomerate made it clear again over the weekend that his energy officer, Greg Abel, will one day succeed him as CEO.
Inheritance of his shares to various foundations also ensures succession. But even the best-laid plans only help Buffett modernize the company up to a point.
At the annual gathering of some 30,000 Berkshire supporters this weekend, questions were raised about the recent banking collapses in the U.S., the company’s large stake in Apple and the impact of artificial intelligence.
The 92-year-old Oracle of Omaha was also asked what happens after he dies. With Ajit Jain overseeing the insurance business and Todd Combs and Ted Weschler looking after part of the investment portfolio, Buffett again clarified that, „barring extraordinary circumstances,” Abel „will be my successor.”
One shareholder expressed concern that Berkshire’s strategy could be hijacked by an activist investor without Buffett and without his voting shares, which will be converted into common stock after his death.
In response, Buffett stressed that his shares will go to certain philanthropic organizations, including the Bill and Melinda Gates Foundation.
They’ll have over a decade to unwind the legacy, leaving Berkshire’s new leaders insulated while they leave their own footprints.
Buffett acknowledged that the agreement gives Abel and others a „honeymoon” period. He also noted, in fairness, that his successors „will be judged on how well” they do.
They’ll likely have a hard time living up to the CEO’s legacy. He made Berkshire so big that it’s harder to beat the market. Plus, Buffett gets some of his best returns simply by being Buffett.
It’s doubtful that Abel’s imprimatur will be enough to close a favorable deal, as Berkshire did with Goldman Sachs during the financial crisis, for example.
Nor is it obvious that entrepreneurs will be so eager to sell their companies to a Berkshire without Buffett.
Succession planning was made possible by Buffett’s iron grip, and not everyone is happy about it. One shareholder, Peter Flaherty, suggested separating the roles of chairman and CEO at Berkshire.
Flaherty began questioning Saturday whether Bill Gates would be a good steward given his alleged relationship with convicted sex offender Jeffrey Epstein before the microphone was silenced. The investor was later arrested for trespassing.
Berkshire’s security department may be able to quell such dissent at its own shareholder meeting, but it can’t quell doubts about life after Buffett.