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Berkshire shareholders look beyond Buffett

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Warren Buffett

(Reuters) — Berkshire Hathaway Inc. shareholders face a question that Warren Buffett sought to tackle at the company's annual meeting: How will Berkshire fare when he's no longer around?

Mr. Buffett, perhaps the world's greatest investor, and with the star power to draw fans from around the world, is 91. His longtime vice chairman, Charlie Munger, is 98.

Shareholders who watched them speak for hours Saturday at the CHI Health Center arena in Berkshire's hometown of Omaha, Nebraska, face the reality they are in the twilight of their careers.

Still, Mr. Buffett's loyal investors say they will still stick with Berkshire, citing the honesty, humility, integrity and trust they believe his company and its leadership, current and future, embody.

“The company is more than Mr. Buffett,” said Ernesto Medina, a pastor from Omaha. “It really is about people that agree on a certain set of values and ethics. And those don't change. You know — or at least I hope.”

Berkshire, whose dozens of businesses include the BNSF railroad, Geico car insurance, and many energy, manufacturing and retailing companies, has a succession plan in place.

Greg Abel, 59, a vice chairman overseeing non-insurance operations, would replace Mr. Buffett as CEO when the need arose, while Vice Chairman Ajit Jain, 70, would likely continue leading insurance operations.

Mr. Buffett's oldest son, Howard, would become non-executive chairman. And Mr. Buffett's portfolio managers Todd Combs and Ted Weschler would take over investments.

Asked by a shareholder how Berkshire might change over time, Mr. Buffett said its building blocks will survive him.

“You've got a board of directors that understands our culture is 99.9% of running the business,” he said. “If we have the same culture, we will be here in 100 years.”

Mr. Buffett pledged that Berkshire would preserve its “special relationship” with shareholders and is built to last.

“There is no finish point," he said. "Nobody is waiting to retire or have their option vested or thinking about 'I'll take another job.' People are doing what they want to do.”

Mr. Buffett acknowledged there could be changes in how Berkshire operates, noting his own autonomy to make major decisions.

“In a crazy way I look at Berkshire as a painting, and it's unlimited in size,” Mr. Buffett said. "It's got an ever-expanding canvas, and I get to paint what I want."

Mr. Buffett said Mr. Abel, in contrast, could face more questions and restrictions from other board members because they know him less well.

“They don't need to, but they'll feel they have to,” Mr. Buffett said.

Berkshire could also face more pressure to do better on environmental and diversity issues, and corporate governance.

Mr. Buffett has fiercely resisted shareholders' calls for improvements, a battle that some analysts see as easier to win in a post-Buffett era. 

That's because Mr. Buffett still controls 32% of Berkshire's voting power, despite owning just 16% of its shares. He has already given away half his Berkshire stock to philanthropy.

On Saturday, shareholders rejected proposals to improve disclosure of climate-related risks and diversity efforts and install an independent chair to replace Mr. Buffett in that role.

This year's shareholder weekend, the first since 2019, was a scaled-back affair, likely because of the pandemic.

Buffett said about 12,000 people attended the Friday shareholder shopping day for discounts from Berkshire-owned businesses, down from the 16,188 reported by the Omaha World-Herald for 2019.

The shareholder reception at Borsheims jewelry was confined to the store, shorn of the parking lot tent with live music and a buffet.

And even Saturday's annual meeting, normally full, appeared to have a couple of thousand empty seats when it began.

 

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