Warren Buffett will provide a visible clue on his succession strategy at annual meeting
The Berkshire Hathaway (BRK-A, BRK-B) shareholder meeting on Saturday, which will stream live exclusively on Yahoo Finance, will look different from any that came before it. Due to COVID-19 precautions, CEO Warren Buffett and Vice Chairman Charlie Munger will lead the event in Los Angeles, rather than Omaha; and they'll do so in a hotel conference room, rather than a giant arena.
Viewers around the globe will notice another novel feature of this year's event: four people on stage.
Vice Chairmen Gregory Abel and Ajit Jain will join Buffett and Munger for the gathering's traditional marathon Q&A, renewing intrigue over the company's succession plans as shareholders meet for the first time since Buffett turned 90 years old.
The presence of Abel and Jain offers a symbolic look toward the company's future and a chance for shareholders to interact with the next generation of leaders, "Buffettologists" told Yahoo Finance. Plus, it provides a preview of what Woodstock for Capitalism might look like after it loses its headliner, they said.
"Opening up leadership to four people as opposed to two — that’s a pretty visible commitment to presenting a strategy of succession," says Laura Rittenhouse, corporate consultant and author of “Buffett's Bites: The Essential Investor's Guide to Warren Buffett's Shareholder Letters.”
"Ajit and Greg are the key potential successors at Berkshire," she adds. "That they’re going to share the stage with Warren and Charlie reveals Warren’s commitment to ensuring a smooth succession. It's a way for shareholders to get to know more about these two potential successors."
At last year's shareholder meeting, Abel replaced Munger on stage alongside Buffett. Though the pandemic prompted the swap, it nevertheless caught the eye of some observers who wondered whether the presence of Abel made him a front-runner to become CEO. (In his shareholder letter last February, Buffett had announced that both Abel and Jain would attend the meeting, but later changed plans due to COVID-19.)
'100% prepared for our departure'
In 2018, Buffett added senior executives Abel and Jain to its Board of Directors, both with the title of vice chairman, fueling speculation that they were first in line to succeed him. The 58-year-old Abel rose through the company’s energy division; while 69-year-old Jain has overseen the company’s insurance operations.
Another potential successor, Todd Combs, 50, took over as the CEO of Berkshire Hathaway-owned car insurer Geico last January, after serving as an investment manager at the company for a decade. Observers also point to current portfolio manager Ted Weschler, 58, who arrived at the company in 2011, not long after buying lunch with Buffett at auction two straight years for a combined $5.2 million.
Buffett has said on several occasions that he has a successor picked out, going back at least to 2012.
Buffett, who has run Berkshire Hathaway since 1965, confirmed that it has succession plans in an annual shareholder letter released in February. Acknowledging that he and 97-year-old business partner Charlie Munger would someday leave the company, Buffett writes, “Berkshire shareholders need not worry: Your company is 100% prepared for our departure.”
Speaking with Yahoo Finance last year, Buffett pointed to the companies in which Berkshire Hathaway holds its largest stakes, which include Apple (AAPL) and Bank of America (BAC), asserting that they all have succession plans even if they don’t publicize the name of the successor.
“I don’t know who the successor is to the CEO in any one of those 10,” he says. “And I’ve watched a lot of successors come and go in those holdings. So to think that we wouldn’t have somebody, well, it’s just crazy.”
For more than five decades, Buffett has run Berkshire Hathaway, which wholly owns over 60 companies, including Geico and Dairy Queen, and holds minority stakes in JPMorgan Chase (JPM) and Coca-Cola (KO), among others. He has a net worth of $102.8 billion and has vowed to give away nearly all of it as part of The Giving Pledge.
When Serwer joked last year that the successor probably isn’t pop singer Justin Bieber, the Oracle of Omaha replied, “It isn’t even Elon Musk.”
Buffett is known worldwide as a symbol of humane capitalism, with his face emblazoned on T-shirts and investment advice cited in countless books.
No matter who succeeds Buffett, they won't be able to carry the mantle of his public persona, said Robert Miles, longtime Berkshire Hathaway shareholder and author of "The Warren Buffett CEO."
"They’re not going to be another Warren Buffett and in some ways it's very difficult to succeed him," he says. "It's kind of like wearing Babe Ruth's number and his uniform. You’re not going to be Babe Ruth — you’re just going to be the best you are."
But this year's shareholder meeting will offer the first preview of how Abel and Jain perform together on stage, and whether the two will carry on the unique shareholder meeting after Buffett and Munger have gone.
"Will the Woodstock of Capitalism post-Buffett still be the love fest that it is or will it shrink down like other annual meetings, [lasting] for an hour or two?" Miles asks. "Will it still draw 40,000 people?"
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