NEW YORK: Berkshire Hathaway has been synonymous with Warren Buffett.
It now falls to his oldest son, Howard Buffett, to keep the conglomerate’s culture alive.
Last Friday’s announcement that Buffett, 96, stepped down as chairman means the investing legend won’t have a management role at the company he took over in 1965, or even be a regular sounding board for Greg Abel, who succeeded him as chief executive officer (CEO) in January.
Howard Buffett, 71, will assume a far different role as non-executive chairman, focused on preserving Berkshire’s culture and values.
It is the latest move in a years-long leadership transition.
“This one is really about continuity,” said Michael Withers, a management professor at the University of Notre Dame’s business school.
“The test moving forward will be whether Abel and Howard can honour (Warren Buffett’s) legacy while still giving Berkshire room to adapt to a market that looks very different from the one Buffett mastered.”
Their longtime presence may assure investors and analysts who don’t expect, or necessarily want, big changes at the approximately US$1.1 trillion conglomerate, which owns the BNSF railroad, car insurer Geico, and a slew of energy, industrial and retail companies, along with a stock portfolio that includes American Express, Apple and Coca-Cola.
Abel joined Berkshire in 2000 when it bought the former MidAmerican Energy, and became part of Berkshire’s leadership team in 2018.
Howard Buffett has been with Berkshire even longer, as a director since 1993.
“Howard’s there as a watchdog,” said James Armstrong, president of Henry H Armstrong Associates in Pittsburgh, and a longtime Berkshire investor.
“Minimise bureaucracy, stay focused on long-term goals, put the shareholders first, no self-dealing, no corruption and widen the moat that protects Berkshire’s businesses.”
Abel, 64, has largely followed Buffett’s playbook since becoming CEO.
Berkshire’s near-record US$364.7bil of cash as of June 30 gives him freedom to buy more companies and stocks, repurchase the Omaha, Nebraska-based company’s own shares and perhaps institute a dividend.
Buffett wrote last Friday in a shareholder letter that Abel has exceeded his “sky high” expectations.
“Think of Howard as a policy the shareholders own and hope never to claim against,” he wrote.
Buffett still controls more than 13% of Berkshire’s stock and about 30% of its voting power.
These percentages will decline as his shares get distributed to foundations overseen by his children.
“Buffett built one of the great American companies,” said Macrae Sykes, a portfolio manager at Gabelli Funds.
“This ends Buffet’s corporate career, but not his influence at Berkshire.” — Reuters
