Buffett says next Berkshire CEO should be more than a stock picker

NEW YORK — Mr Warren Buffett said Berkshire Hathaway Inc should look beyond stock pickers when selecting its next chief executive officer.

A CEO should have “a significant array of skills”, Mr Buffett, 84, said yesterday (May 2) at Berkshire’s annual meeting in Omaha, Nebraska. The billionaire said he’s unlikely to support someone whose only expertise is in investing, but could accept a candidate who also had operational experience.

Shareholders have speculated for years about who will eventually replace Buffett as CEO. The billionaire, who is also chairman, has said his son Howard Buffett could replace him as leader of the board, and that money managers Todd Combs and Ted Weschler could handle the company’s investments. Berkshire has a stock portfolio valued at more than US$100 billion, including the biggest stakes in Wells Fargo & Co and Coca-Cola Co.

In his annual report to shareholders in February, Buffett outlined the qualities that he and the board were looking for in his successor, while keeping the leading candidate’s identity secret. He wasn’t asked directly at yesterday’s meeting about who will be the next CEO.

Investors have speculated that Mr Ajit Jain and Mr Greg Abel are the leading candidates. Both were named in a separate letter that Berkshire Vice Chairman Charles Munger, 91, wrote in the annual report. Mr Munger described them as examples of “world-leading” executives who are in some ways better than Mr Buffett. Mr Jain, 63, runs Berkshire’s namesake reinsurance operation, while Mr Abel, 52, oversees the energy-utility business.

Mr Buffett fueled Berkshire’s earlier growth by investing premiums held at insurance units in stocks. Over his five-decade tenure at the company, the balance shifted more toward operating wholly and majority-owned businesses. Its operations now include manufacturers, retailers and BNSF, one of the largest US railroads.

BUFFETT’S LEARNING

“I’ve learned a lot from operations that I wouldn’t have learned if I’d stayed in investments all my life,” Mr Buffett said.

Combs and Weschler, former hedge fund managers, were hired in the past five years to help run investments. Since then, their duties have expanded. They’ve helped their boss vet possible acquisitions and he’s praised their dedication to Berkshire.

Yesterday, Mr Buffett said both had a deep understanding of businesses’ competitive strengths and good character, a trait that he said is sometimes lacking among money managers.

The billionaire said that he and Mr Munger had run into plenty of “dysfunctional people with 160 IQs”, including when Buffett led Salomon Inc.

“We’ve specialised in them,” Mr Munger said yesterday.