Few companies have as close a relationship with leaders as Mr. Buffett and Mr. Munger do at Berkshire. Mr. Buffett and Mr. Munger have known each other for more than 60 years, the last 45 as chairman and vice chairman of the Omaha, Nebraska-based conglomerate.
Mr. Munger’s death on Tuesday, five weeks shy of his 100th birthday, left Berkshire vice chairman Greg Abel and Ajit Jain to oversee the non-insurance and insurance businesses, respectively, and the 93-year-old Mr. Buffett. will remain as the chief advisor and consultant.
They became vice chairmen in 2018, taking a more prominent public role only at Berkshire’s most recent annual meeting, a larger role than at almost any other company.
Management said Abel fully embraces Berkshire’s culture, which includes extreme decentralization that gives business units broad autonomy.
This means that large divisions such as railroad company BNSF and auto insurance company Geico each have tens of thousands of employees, while smaller divisions such as Borsheims Jewelry, which has about 142 employees, have as few as 26 employees. This means it can operate without interference from Berkshire headquarters. However, Abel and Jayne have a different style than Buffett and Munger. At the 2021 annual general meeting, Mr. Jain was asked how he interacts with Mr. Abel.
“There’s no question that Warren and Charlie’s relationship is unique and will never be repeated,” Jayne said. “We don’t interact as often as Warren and Charlie, but we discuss each other’s business quarterly.”
Mr. Abel said he consulted with Mr. Jain regularly, especially when something unusual happened in Berkshire’s business.
Investors say they have confidence.
“It’s inconceivable that investors weren’t thinking about what would happen if Mr. Buffett left,” said Bill Stone, chief investment officer at Glenview Trust. “They don’t have to be as good as Buffett or Munger to make Berkshire a good company, and perhaps a great company.”
Berkshire did not immediately respond to a request for comment outside business hours.
CEO Designated Person
Berkshire has had a succession plan in place since at least 2006, when Mr. Buffett, then 75, told shareholders that the company he had run since 1965 was ready to step down.
Munger announced during Berkshire’s 2021 annual meeting that Abel, a 61-year-old Edmonton, Alberta native who spent a quarter of a century at what is now Berkshire Hathaway Energy, will be its next CEO. I accidentally gave the signal.
Jain, 72, will continue to oversee insurance operations.
Buffett praised both executives in a 2013 video message, calling Abel a “first-rate human being” and Jain a “superstar.”
A lifelong hockey fan, Mr. Abel graduated from the University of Alberta in 1984 and worked at PricewaterhouseCoopers and energy company Cal Energy before joining what was then known as MidAmerican Energy in 1992 and joining the company in 2000. It was acquired by Berkshire in 2013.
Mr. Abel took charge of MidAmerican in 2008 and benefited from the company’s ability to retain profits rather than pay dividends, which was unusual in the utility industry. This gave him the freedom to make acquisitions and expand into renewable energy.
Investors will have to wait to see whether Mr. Abel is willing to let go of a business with poor performance and mediocre prospects, or whether Berkshire will pay its first dividend since 1967.
Mr. Jain, who was born in the Indian state of Odisha, specializes in pricing risk, especially big risks such as natural disasters. He joined Berkshire in 1986.
In addition to the top two executives, Berkshire’s plan also calls for Buffett’s eldest son, Howard Buffett, to become non-executive chairman and be primarily responsible for maintaining Berkshire’s culture.
Todd Combs and Ted Weschler help manage Buffett’s $300 billion-plus Berkshire common stock portfolio, about half of which is held in one stock, Apple, and they plan to take over all of it. it seems like.
“Berkshire has talented people who can help pick stocks,” said Bill Smead, chief investment officer of Smead Capital Management in Phoenix. “But it will never be the same.”
loss of legacy
For shareholders, the hallmark of Berkshire’s world is the annual meeting, a pilgrimage known as “Woodstock for capitalists” where Mr. Buffett and Mr. Munger answer shareholder questions for more than five hours.
It’s a weekend of shopping, investor conferences and events that draws tens of thousands of people to Omaha in early May, even though fans can stream it on their home computers or smartphones.
Many shareholders, especially local ones, say it will continue, but others are not so sure.
“What really attracted us to them was the idea of thinking clearly, being true to yourself, learning from mistakes, and how to avoid disaster,” said investor Whitney Tilson, who previously ran T2. “It was their advice about living a fulfilling life by teaching others.” Partner and his Kase Capital attend many meetings.
In May 2020, at the height of the pandemic, Buffett held a virtual meeting from Omaha. Mr. Munger was not present.
“It doesn’t really feel like an annual meeting because Charlie Munger, my partner of 60 years, isn’t sitting here,” Buffett said. “I think most of the people who come to our meetings really come to listen to Charlie.”