Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, announced his plan to step down from his role by the end of 2025. Buffett, 94, made the announcement at Berkshire’s annual shareholder meeting in Omaha on Saturday. Buffett said he will ask the company’s board to approve making Gregory Abel, his heir apparent, the new CEO.
Abel, 62, would have “the final word” when it comes to Berkshire’s operations, investments, and more. Buffett will remain chairman of Berkshire and the company’s single biggest shareholder, with a roughly 14 percent stake worth about $164 billion. Upon his death, Buffett’s son Howard will take over as chairman.
The plan, which Buffett said had been known only to two of his children who sit on the company’s board, Howard and Susan Buffett, was met with a minute-long standing ovation by Berkshire shareholders. Abel appeared surprised by the announcement, and several board members attending the meeting hugged each other.
Buffett announces succession plan
Though Buffett looked in good health, having led several hours of questions from investors on Saturday, changes to this year’s annual meeting reflected his advancing age. He used a cane and shortened the shareholder question session by several hours. Buffett’s stepping down will mark the end of an era at Berkshire Hathaway, the company he transformed over more than half a century into a powerhouse of American business.
As CEO, Abel’s primary role will be to allocate capital, deciding on the acquisition of entire companies. Buffett’s two investment lieutenants, Todd Combs and Ted Weschler, have independently managed about $15 billion each for Berkshire over the past decade. Some speculate that they will have a bigger role in managing Berkshire’s stock portfolio after Buffett’s departure.
Catherine Seifert, an analyst at CFRA who covers Berkshire, thinks that the company could establish a role of Chief Investment Officer to oversee its investments, with Weschler potentially filling the position. Abel stated over the weekend that he will continue Buffett’s patient value investing approach and stands ready to deploy Berkshire’s enormous $347 billion in cash when a good opportunity presents itself. As the transition approaches, Berkshire Hathaway’s investors and followers will undoubtedly keep a close eye on how the legendary firm navigates this new era.