Buffett Says His Successor Will Want Partner Like Munger

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A) for more than four decades, said his successor as CEO will probably develop a partner like Vice Chairman Charles Munger.

“Berkshire is better off because the two of us have worked together,” Buffett, 83, said today of Munger, 90, at their company’s annual meeting in Omaha, Nebraska. Such a joint effort will add to the new CEO’s achievements and the “fun they have,” Buffett said.

Buffett has praised Munger for guiding his investing approach and said the company should rely more on the views of the vice chairman. Betting on Energy Future Holdings Corp. bonds without consulting Munger was a “big mistake” Buffett wrote in a letter posted March. The electricity company filed for bankruptcy in April.

Thomas Murphy, 88, a Berkshire director, is another example of a manager who benefited from such a partnership, Buffett said. Murphy and Daniel Burke previously ran Capital Cities/ABC, one of Berkshire’s most successful investments, in the 1990s. Burke’s son Stephen is on Berkshire’s board too.

Asked whether directors had discussed a succession plan for Munger’s role, Buffett said they had not, and that it was hard to think about how the vice chairman could be replaced.

Photographer: Daniel Acker/Bloomberg

Berkshire Hathaway Chairman Warren Buffett tours the exhibition floor prior to the company's shareholders meeting in Omaha, Nebraska, on May 3, 2014. Close

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Photographer: Daniel Acker/Bloomberg

Berkshire Hathaway Chairman Warren Buffett tours the exhibition floor prior to the company's shareholders meeting in Omaha, Nebraska, on May 3, 2014.

“I don’t think the world has much to worry about,” Munger joked. “Most 90-year-old men are gone soon enough.”

Berkshire has fended off questions for years about who might replace Buffett at the top of the $300 billion company he built through takeovers and stock picks. The billionaire, who’s also Berkshire’s largest shareholder and head of investments, has said his roles will be divided once he’s no longer around.

‘All-Stars’

In March, the company eliminated language from its annual filing to securities regulators specifying how many candidates the board has to replace Buffett, while reiterating that directors were in agreement on their top pick.

Buffett relies on the CEOs of Berkshire’s dozens of operating businesses to handle day-to-day decisions, leaving him time to pursue takeovers and invest in stocks and bonds. He has used his annual letter to shareholders to praise the work of the company’s managers, whom he calls “all-stars.”

Comments in the letters and other statements led Berkshire investor Jeff Matthews to guess that Ajit Jain, the reinsurance chief, is the most probable candidate to be next CEO. Other possible picks include Greg Abel, who leads Berkshire’s utility business, and Matt Rose of railroad BNSF, Matthews wrote in a book on the subject.

No Judgments

Buffett said today that shareholders shouldn’t “make any judgments” about succession planning at Berkshire based on what happens at subsidiaries. Rose took on the newly created job of executive chairman at BNSF this year, handing over the CEO title to Carl Ice.

Buffett has prepared Berkshire for his own departure. He’s hired former hedge-fund managers Todd Combs and Ted Weschler and has gradually given them more money to invest on Berkshire’s behalf. Once Buffett’s gone, they’ll oversee investments valued at more than $100 billion including the largest holdings in Wells Fargo & Co. and American Express Co.

The incoming chief may also get help from Tracy Britt Cool, Buffett’s financial assistant. The 29-year-old has spent the last few years traveling the country, assisting subsidiaries that are too small to command her boss’s attention. She could be of “particular value” to the next CEO, Buffett said in an interview this year.

The billionaire has said his son Howard Buffett, a Berkshire director since 1993, could be non-executive chairman. The younger Buffett has said he could protect Berkshire’s culture of giving managers autonomy to run their businesses.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net Dan Reichl

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