Date
19 November 2017
Warren Buffett says his successor would have to have the ability to fight the ABC of business -- arrogance, bureaucracy and complacency. Photo: Intenet
Warren Buffett says his successor would have to have the ability to fight the ABC of business -- arrogance, bureaucracy and complacency. Photo: Intenet

Warren Buffett hints at successor

Warren Buffett has sparked fresh speculation about his potential successor as Berkshire Hathaway shareholders marked the company’s golden anniversary.

Vice chairman Charlie Munger got the ball rolling by saying the company’s next leader could be either its reinsurance chief Ajit Jain or Greg Abel, who runs its utilities division, the Financial Times reported Monday.

“Under this Buffett-soon-leaves assumption, his successors would not be of only moderate ability. For instance, Ajit Jain and Greg Abel are proven performers who would probably be under-described as world-class,” Munger said in a letter to shareholders.

“In some important ways, each is a better business executive than Buffett,” Mr Munger added. “And I believe neither Jain nor Abel would (1) leave Berkshire, no matter what someone else offered or (2) desire much change in the Berkshire system.”

In his own letter peppered with reminiscences, Buffett, 84, defended Berkshire’s corporate structure but gave no details about succession.

He did say the next chief executive would be “all in” for Berkshire and would be a “rational, calm and decisive individual” able to prevent the corporate arrogance that befell once giant corporations such as US Steel and General Motors.

“My successor will need one other particular strength: the ability to fight off the ABCs of business decay, which are arrogance, bureaucracy and complacency.

When these corporate cancers metastasize, even the strongest of companies can falter,” he wrote.

“Only a vigilant and determined CEO can ward off such debilitating forces as Berkshire grows ever larger.”

Buffett also revealed that he has expanded the roles of Todd Combs and Ted Weschler, his two investment deputies, who have each been given the chairmanship of one of Berkshire’s operating subsidiaries.

The aim is to make them “even better investors than they already are”, he said.

Jim Shanahan, analyst at Edward Jones, expressed frustration that Buffett’s successor remained unnamed.

“Several years ago, Buffett announced that the board had chosen his successor as CEO, but that they also had two backups. At that time, all three names were to remain secret. Is there perhaps a shorter list today?”

Buffett vowed never to spin off any of Berkshire Hathaway’s subsidiaries, defending the “sprawling conglomerate” he has assembled over the past 50 years.

He said Berkshire had shifted from being an investment vehicle to being primarily an owner and operator of businesses and predicted it would continue to outpace the rest of the market for decades to come.

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