NEW YORK, May 8 (Reuters Breakingviews) - Warren Buffett gives off a zen vibe about Berkshire Hathaway (BRKa.N) after his time is up. The billionaire boss of the $720 billion insurance and investing conglomerate made clear again over the weekend that his energy lieutenant, Greg Abel, would follow him someday as CEO. Bequeathing his stock to various foundations provides ownership succession, too. Even those best-laid plans, however, only help Buffett-ize the company up to a point.
At this weekend’s annual gathering of some 30,000 Berkshire acolytes, there were questions about recent U.S. bank failures, the company’s large stake in Apple (AAPL.O) and the impact of artificial intelligence. The 92-year-old Oracle of Omaha also was asked about what happens after he’s gone. With Ajit Jain overseeing the insurance operations, and Todd Combs and Ted Weschler handling some of the investing portfolio, Buffett made clear again that “absent some extraordinary circumstance” Abel is “going to succeed me.”
One shareholder raised a concern that without Buffett, and his super-voting stock converting to the common variety when he dies, Berkshire’s strategy could be commandeered by an activist investor. In response, Buffett emphasized how his shares will go to designated philanthropic organizations, including the Bill and Melinda Gates Foundation. They’ll have over a decade to wind down the inheritance, in effect insulating Berkshire’s new leaders while they leave their own imprint.
Buffett acknowledged the arrangement gives Abel and others a “honeymoon” period. He also noted, fairly, that his successors “will get judged based on how well” they do. They are likely to struggle to live up to the CEO’s legacy. He has grown Berkshire so big it’s harder to beat the market. Buffett also gets some of his best returns simply by being Buffett. Whether Abel’s imprimatur will be enough to secure a sweetheart deal like the one Berkshire landed during the financial crisis with Goldman Sachs (GS.N), for example, is questionable. It’s also not obvious entrepreneurs will sell their companies so eagerly to a Buffett-less Berkshire.
The succession planning has been possible because of Buffett’s iron grip, and not everyone is happy about it. One shareholder, Peter Flaherty, proposed separating the chairman and CEO roles at Berkshire. Flaherty on Saturday started to question whether Bill Gates would be a good custodian given his alleged relationship with convicted sex offender Jeffrey Epstein, before the microphone was silenced. The investor was later arrested on charges of criminal trespassing. Berkshire security may be able to shut down such dissent at its own shareholder meeting, but it can’t stifle the doubts about life after Buffett.
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Billionaire Warren Buffett repeated at Berkshire Hathaway’s annual shareholder meeting on May 6 that Greg Abel, who oversees the company’s energy operations, would follow him as CEO. “Absent some extraordinary circumstance … he’s going to succeed me,” Buffett said.
