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)
Copyright (c) 2018 Dow Jones & Company, Inc.
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