BRK.A Berkshire Hathaway Inc

By Nicole Friedman 

OMAHA, Neb. -- Warren Buffett is still the face of Berkshire Hathaway Inc., but behind the scenes, his deputies are frequently calling the shots.

At Berkshire's annual meeting this weekend, Mr. Buffett said four executives -- Greg Abel, Ajit Jain, Ted Weschler and Todd Combs -- are already handling many of the day-to-day responsibilities of running Berkshire. Mr. Buffett remains chairman, chief executive and chief investment officer, but "'semiretired' probably catches me at my most active point," he joked in front of thousands of shareholders at the CenturyLink Center in Omaha on Saturday.

In January, Mr. Buffett promoted Messrs. Jain and Abel to vice chairmen. The managers of Berkshire's 60-odd businesses now report to one of the two executives, not to Mr. Buffett. In interviews this weekend, several Berkshire subsidiary CEOs said the new leaders have touched base, though they foresee little change, especially because both men were promoted from within the company and understand its culture.

By starting the management transition while he is still in charge, Mr. Buffett hopes to instill shareholder confidence in the next generation of Berkshire leaders, said Thomas Russo, partner at Gardner Russo & Gardner, a longtime holder of Berkshire shares.

"This is a very serious transitional year," Mr. Russo said. On Mr. Buffett's part, "I think there's a real sense of willingness to let go of things."

Messrs. Jain, Abel and Combs didn't respond to requests for comment, and Mr. Weschler declined to comment.

Since taking over the vice chairman role in January, Mr. Abel has spent time speaking with his new direct reports and visiting the headquarters of some Berkshire companies.

Mr. Abel "will get a bit more engaged in some of the details that Warren just didn't have time for," said Eric Schnur, CEO of Berkshire chemical company Lubrizol, which Mr. Abel visited last month.

Like many Berkshire businesses, Ohio-based Lubrizol doesn't have a traditional board of directors, Mr. Schnur said. Mr. Abel is "another set of eyes to give us some ideas."

Mr. Buffett, who is 87 years old, has said for years that he would run Berkshire as long as he is able. Since he took over Berkshire in 1964, the firm has grown into a sprawling conglomerate with businesses as diverse as aerospace manufacturing, fast food and real estate.

Mr. Buffett partly attributes Berkshire's success to its decentralized culture. While some managers are in frequent touch with Mr. Buffett, others speak to him once a year or less, he said at the meeting.

"It's a light touch coming from the top," said Ron Olson, partner at Munger, Tolles & Olson and a Berkshire board member. But "as we have added companies through the years, Warren was increasingly stretched."

Mr. Abel, who was previously CEO of Berkshire Hathaway Energy, now runs all the non-insurance businesses and sets compensation for those managers. Mr. Jain, who was Berkshire's top reinsurance executive, now oversees all of its insurance businesses, including car insurer Geico.

The change was evident at the annual gathering of Berkshire CEOs in Omaha on Thursday and Friday. Mr. Buffett and Berkshire Vice Chairman Charles Munger joined the CEOs for a discussion on Thursday. The next day, they heard from Messrs. Jain and Abel. Mr. Combs also gave a presentation to the group about Berkshire's partnership with Amazon.com Inc. and JPMorgan Chase & Co. to lower the three companies' health-care costs.

"Every time I go to the managers' luncheon, I feel more strongly at the end of the luncheon" about Berkshire's future, Mr. Munger said at the annual meeting. "The culture is going to last a long time."

Brooks Running in Seattle expects Mr. Abel to visit its offices later this year, said CEO Jim Weber. But "we're not waiting around for anyone" to give direction from Berkshire headquarters on how to run the shoe company, he said. "We act and operate it like we own it."

Mr. Buffett said at the meeting that he is less involved in many business decisions than he used to be. He and Mr. Munger helped set prices for See's Candies decades ago, but now he doesn't know the per-pound price of its chocolates, he said.

Mr. Buffett still handles almost $200 billion in stock and bond investments and large capital expenses including big acquisitions.

But his two portfolio managers, Messrs. Combs and Weschler, manage about $25 billion in stock investments and take on other projects. Mr. Weschler arranged Berkshire's 2017 investments in Home Capital Group Inc. and Store Capital Corp., and he has scouted out opportunities for Berkshire in Germany. Mr. Combs is overseeing Berkshire's role in the health-care initiative with Amazon and JPMorgan.

Because the two managers have already arranged deals for Berkshire, Mr. Buffett said shareholders shouldn't worry about lucrative investment opportunities drying up for the company in the future.

Either Mr. Combs or Mr. Weschler was also the first to buy Apple Inc. for Berkshire's portfolio. The company is now one of Berkshire's top holdings, as Mr. Buffett started buying the stock as well. Berkshire owns about 5% of Apple, Mr. Buffett said Saturday.

Write to Nicole Friedman at nicole.friedman@wsj.com

(END) Dow Jones Newswires

May 07, 2018 05:14 ET (09:14 GMT)

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