Buffett positions 2 execs in line to be his successor
Warren Buffett finally confirmed what many investors have already guessed about who will succeed him as chief executive officer of Berkshire Hathaway, the sprawling conglomerate he’s built over the past five decades.
In naming two senior executives — Ajit Jain and Greg Abel — to the company’s board and giving them each responsibility for large swaths of Berkshire’s businesses, he positioned one of the two men to probably be his replacement.
“It’s part of the movement toward succession,” Buffett said Wednesday on CNBC, after the promotions were announced. “They are the two key figures at Berkshire.”
Abel, 55, will be vice chairman of the non-insurance business, while Jain, 66, will be vice chairman of the insurance operations, the company said. Buffett signaled that the executives will be responsible for overseeing subsidiaries in their area, setting compensation for the leaders of those businesses and helping weigh smaller acquisitions.
Abel has run Berkshire Hathaway Energy, the conglomerate’s burgeoning utility unit, and Jain has been in charge of the reinsurance business for the Omaha, Neb.-based company.
The new arrangement puts into place an organizational structure that is designed to give Abel and Jain more experience with the company’s wide-ranging operations, and free up more of Buffett’s time. For decades, the billionaire has overseen Berkshire with a shoestring staff, even as his company grew to include dozens of subsidiaries like auto insurer GEICO, BNSF Railway, Fruit of the Loom, the Buffalo News and Dairy Queen.
Berkshire’s Class A shares rose 1.25 percent Wednesday, giving the company a market value of more than half a trillion dollars.
While the identity of Buffett’s successor has remained a mystery for years, he has said he wants the next leader to be drawn from the company’s ranks, relatively young and unmotivated by ego.
Abel, who grew up in Canada, has steadily expanded Berkshire’s utility holding company based in Iowa into a colossus in the energy industry. It runs several power companies throughout North America and the U.K., interstate natural gas pipelines, and giant wind and solar farms. It’s a big part of Berkshire that stands to get only bigger, Buffett said in May at the company’s annual shareholder meeting, adding that it’s “hard to imagine a better-run operation.”
Comments like those have caused some investors to bet on Abel as the more likely pick. They often also cite that he’s more than a decade younger than Jain.
A native of India, Jain has run the company’s namesake reinsurance operation, which for decades has provided Berkshire with billions of premium dollars for investments and acquisitions. Buffett has repeatedly said that Jain has probably made more money for shareholders than he has. In 2011 he said the board would make Jain CEO if he wanted the job.
Buffett, 87, said in the interview that he’s in “remarkably good health” and that the changes don’t imply that he’s less passionate about his company.