Buffett reveals name of his likely successor
Berkshire’s director of non-insurance operations is next up
During his decadeslong career, Warren Buffett has fielded questions on perhaps the broadest array of topics ever asked of a chief executive. But in more recent years, no question has been more pointed than who would succeed Buffett as chairman and chief executive of Berkshire Hathaway, the conglomerate he built into a $631 billion colossus.
In a seemingly off-handed way, Buffett has finally answered that question.
Gregory Abel, who oversees Berkshire’s non-insurance operations, is next in line to lead the company, Buffett confirmed to CNBC in an interview broadcast Monday.
“The directors are in agreement that if something were to happen to me tonight, it would be Greg who’d take over tomorrow morning,” said Buffett, who turns 91 in August.
An assistant to Buffett did not respond to a request for comment.
It is a time of new challenges for Berkshire, whose operations include a power business long led by Abel, 59, as well as the Burlington Northern Santa Fe railroad, a vast insurance business and an array of manufacturing and consumer brands.
Berkshire’s stock performance, long regarded as the company’s biggest selling point, has lagged behind the broader market in recent years, with shareholders asking at the company’s annual meeting Saturday whether Buffett has lost a step.
And the company faces pressure to follow corporate America’s lead in acting on social issues. While Berkshire shareholders followed Buffett’s recommendations in rejecting two investor proposals that called for greater disclosure about the company’s efforts to address climate change and the diversity of its workforce, each ini
tiative gained support from about a quarter of all votes cast. That is a far higher percentage than analysts had expected, and included big money managers like BlackRock.
Buffett has said for several years that he and his board had been thinking about who would take over when he steps down. Last year, for instance, he wrote in his annual letter to investors, “Berkshire shareholders need not worry: Your company is 100 percent prepared” for his departure.
But that opacity has left corporate-governance experts, and increasingly shareholders, dissatisfied: BlackRock, which owns a 5% stake in Berkshire, disclosed this weekend that it had voted against the reelection of the head of Berkshire’s board governance committee in part over “limited disclosure on succession planning.”
The revelation of Abel as Buffett’s likely successor was unusual, even by Berkshire standards: In response to a shareholder question about whether Berkshire might become too complex to manage, Charles T. Munger, Buffett’s longtime business partner, responded, “Greg will keep the culture” — a task that Mr. Buffett has long stressed would be important for Berkshire’s future leader.
Almost immediately, Buffett-watchers began to speculate that Munger had inadvertently let slip one of Berkshire’s most closely guarded secrets. Days later, Buffett clarified the company’s plans to CNBC.
BlackRock declined to comment Monday on Buffett’s disclosure.
For many, Abel’s recognition came as little surprise.
Born in Canada and an accountant by training, Abel spent most of his career at what became MidAmerican Energy, a power utility that Berkshire acquired in 2000. Under Abel and his then-boss, David J. Sokol, MidAmerican bought a string of companies that made it one of America’s biggest power producers. (Sokol was seen as a potential successor to Buffett until he resigned in 2011 after Berkshire concluded he had violated company policy by buying a stake in a chemical firm shortly before recommending Berkshire acquire the company.)
Abel became chief executive of MidAmerican — which has since been renamed Berkshire Hathaway Energy — in 2008, and one of his top focuses has been bolstering the business’s reliance on renewable energy. At Saturday’s annual meeting, Abel said the division, which contributes roughly a tenth of Berkshire’s total revenue, had spent more than $30 billion on renewable energy sources.
“We do have a great deal of comfort in Abel,” said James Shanahan, a research analyst at Edward Jones. “He’s proved to be a really effective leader of Berkshire Hathaway Energy.”
Abel has been a frontrunner to succeed Buffett since 2018, when he was named vice chairman of Berkshire alongside Ajit Jain, the longtime head of Buffett’s vast insurance operations. Analysts and investors widely interpreted the move as signaling that both men were contenders to succeed Buffett as chief executive one day.
Abel and Jain took on prominent roles at Saturday’s annual meeting, an hourslong event that traditionally focused on Buffett and Munger. Each addressed more topics than in years past, from inflation to more unusual topics like whether Berkshire would insure Elon Musk’s planned trip to Mars (“No,” Jain said.).
The bond between the operationally minded Abel and financially focused Jain, who is expected to continue his insurance management role, will be central to Berkshire’s future, according to Lawrence Cunningham, a law professor at George Washington University and a shareholder.
“I think it’s valuable to note the partnership,” Cunningham said of Abel and Jain, likening it to the relationship between Buffett and Munger. “I think that bodes well for Berkshire.”