- Greg Abel is the heir apparent to Warren Buffett at Berkshire Hathaway.
- Abel, 58, is vice chairman of Non-Insurance Business Operations.
- Ajit Jain, 69, vice chairman of Insurance Operations, would succeed Abel, if needed.
- Age was a key factor in choosing Abel over Jain.
The eventual successor to 90-year-old Warren Buffett as chairman and chief executive officer (CEO) of Berkshire Hathaway Inc. (BRK.A, BRK.B) will be Greg Abel, the 58-year-old vice chairman of Non-Insurance Business Operations, according to an accidental disclosure. The disclosure did not come in a formal announcement by the company, but rather in a stray remark from Buffett's longtime top lieutenant, 97-year-old Vice Chairman Charlie Munger, during Berkshire's 2021 Annual Meeting.
While discussing the strengths of Berkshire's decentralized operating structure, Munger remarked during the meeting, "Greg will keep the culture." In an interview with CNBC published on Monday, May 3, 2021, Buffett elaborated, "The directors are in agreement that if something were to happen to me tonight, it would be Greg who'd take over tomorrow morning."
Abel's Giant Challenge
Buffett has not made it clear exactly when he will step down as CEO. But Buffett's and the board's choice of Abel eventually would place him at the helm of one of the world's largest companies, a vast conglomerate that posted $245.5 billion in revenue last year from businesses ranging from insurance to railroads to energy generation to manufacturing. The company today has a market value of around $645 billion. For decades, the company outperformed the stock market and its CEO, Buffett, was dubbed the 'Oracle of Omaha,' in reference to the company's headquarters city. But Abel's major challenge would be to boost the company's performance, which has badly lagged the market in recent years.
Meanwhile, Buffett also disclosed that the 69-year-old vice chairman of Insurance Operations, Ajit Jain, is next in the line of succession behind Abel. "If, heaven forbid, anything happened to Greg tonight then it would be Ajit," Buffett added.
'We've Always Had Unanimous Agreement' On Succession
Buffett and Berkshire have been criticized in recent years for not announcing publicly a formal succession plan in light of Buffett's and Munger's advanced ages. Buffett asserts, however, that the board always has had a such plan, even if it were not made public. As he told CNBC: "We've always at Berkshire had basically a unanimous agreement as to who should take over the next day. The world's paying more attention now."
Importance of Age
Buffett indicated that age is a key consideration for the board, leading to the younger Abel's getting the nod over Jain. "They're both wonderful guys. The likelihood of someone having a 20-year runway though makes a real difference."
During the 2021 annual meeting, by way of deflecting discussion about succession plans, Buffett jokingly observed that Berkshire probably has the slowest-aging senior management team anywhere, given that each passing year adds only a bit more than 1% to Munger's and his ages. By contrast, he continued, a 25-year-old manager at another firm will be 4% older a year hence.
'First-Class Human Being'
In 2013, Buffett called Abel "a first-class human being." Buffett continued: "There's a lot of smart people in this world, but some of them do some very dumb things. He's a smart guy who will never do a dumb thing."
According to longtime Berkshire shareholder James Armstrong, president of investment management firm Henry H. Armstrong Associates: "Greg has a lot of experience dealing with regulators and making acquisitions, and a track record of managing many people. The board has had a lot of time to watch him in action."