Full disclosure: All of my managed accounts have a position in the Berkshire B shares as well as a majority of the accounts I manage for family members.
This weekend the annual Berkshire Hathaway annual letter to shareholders came out, I’m still picking through it myself. One of the big question marks surrounding the company is what will happen when Warren and his right-hand man Charlie Munger are no longer able to serve (both men are getting up there in age with every passing year). Buffett decided to lead off with this topic for the 2011 letter, here’s what he had to say on the topic:
The primary job of a Board of Directors is to see that the right people are running the business and to be sure that the next generation of leaders is identified and ready to take over tomorrow. I have been on 19 corporate boards, and Berkshire’s directors are at the top of the list in the time and diligence they have devoted to succession planning. What’s more, their efforts have paid off.
As 2011 started, Todd Combs joined us as an investment manager, and shortly after yearend Ted Weschler came aboard. Both of these men have outstanding investment skills and a deep commitment to Berkshire. Each will be handling a few billion dollars in 2012, but they have the brains, judgment and character to manage our entire portfolio when Charlie and I are no longer running Berkshire.
Your Board is equally enthusiastic about my successor as CEO, an individual to whom they have had a great deal of exposure and whose managerial and human qualities they admire. (We have two superb back-up candidates as well.) When a transfer of responsibility is required, it will be seamless, and Berkshire’s prospects will remain bright. More than 98% of my net worth is in Berkshire stock, all of which will go to various philanthropies. Being so heavily concentrated in one stock defies conventional wisdom. But I’m fine with this arrangement, knowing both the quality and diversity of the businesses we own and the caliber of the people who manage them. With these assets, my successor will enjoy a running start. Do not, however, infer from this discussion that Charlie and I are going anywhere; we continue to be in excellent health, and we love what we do.
So we don’t know who the successor for the CEO role will be (Buffett’s son Howard is his successor as Chairman and will carry on the soul and tradition of prudence his father has instilled. For more on the mystery CEO successor, head over to the Bloomberg story below…
The full letter can be downloaded below (PDF):