Warren Buffett Finally Names His Successor

The next CEO of Berkshire Hathaway will be Greg Abel.

In the past, Warren Buffett had famously said that the identity of his successor at Berkshire Hathaway was written on a piece of paper that was sitting in a drawer in his office desk.

When Buffett passed away, it was thought, the piece of paper would be extracted and the new CEO would be named according to Buffett's wishes.

Earlier this week, however, Buffett and Charlie Munger both declared, in their own ways, that Greg Abel would, in fact, be the next CEO of Berkshire Hathaway.

Most people assumed that one of either Abel or Ajit Jain would be the next CEO of Berkshire Hathaway - after all, Abel and Jain were named Vice Chairmen of Berkshire Hathaway a few years ago, which was a pretty clear indicator that one of the two men would be the next CEO of the company.

In fact, many people assumed that Jain would be given the nod to lead Berkshire Hathaway after Buffett's death, given Buffett's love for the insurance business (Jain leads Berkshire Hathaway's insurance operations).

Energy is another important business sector for Berkshire Hathaway, however, and Abel is the Chairman and CEO of Berkshire Hathaway Energy.

-

One factor that may have helped Abel is the fact that he is 11 years younger than Ajit Jain. Abel is 58 years old, while Jain will be turning 70 this July.

-

For years the identity of Warren Buffett's successor appeared to be David Sokol, who used to run Berkshire Hathaway Energy and Netjets for the company.

Sokol would resign from Berkshire Hathaway in 2011 after it came out that he had purchased a large block of shares in Lubrizol before recommending the company for purchase to Warren Buffett.

Berkshire Hathaway would eventually purchase the company, giving Sokol a $3 million profit.

After Sokol's trades were brought to the attention of Berkshire Hathaway's Audit Committee, the Committee found that Sokol had violated Berkshire Hathaway's Code of Ethics and insider trading rules.

Sokol resigned in disgrace, having ruined his reputation over one trade.

That is one of the most expensive gaffes in history, as Sokol had a very good chance of running Berkshire Hathaway one day, and likely would have made himself a fortune that dwarfed the $3 million that he made on the Lubrizol trade.

Filed under: General Knowledge