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Buffett Adds One to Successor List as Rose Completes First Year

BNSF CEO Matt Rose
Matt Rose, chairman, chief executive officer and president of Burlington Northern Santa Fe. Corp., (BNSF). Photographer: Matt Nager/Bloomberg

Warren Buffett, the 80-year-old chief executive officer of Berkshire Hathaway Inc., added a name to a list of potential successors a year after his $26.5 billion railroad takeover brought manager Matt Rose to the firm.

Buffett placed Rose, CEO of Burlington Northern Santa Fe, in the company of Berkshire executives David Sokol and Greg Abel when doling out praise in his annual letter to shareholders on Feb. 26. Buffett said he was “proud and grateful” for the performance of the three managers. Berkshire, based in Omaha, Nebraska, said yesterday it had identified four candidates to succeed Buffett, up from three a year ago. No names were given.

Berkshire’s next CEO will be handed oversight of a firm that posted $13 billion of profit last year and invested $6 billion in property and equipment. Rose, 51, joined Berkshire in February 2010 after selling Burlington Northern to Buffett. The Fort Worth, Texas-based railroad, which has 6,600 locomotives and 23,000 miles of track, contributed $2.2 billion to Berkshire’s profit last year.

Rose is “an absolutely splendid CEO, who’s young, proven and skilled at running a public company,” said Thomas Russo, a partner at Berkshire investor Gardner Russo & Gardner. “If someone excels at massive capital spending, they have a long and profitable future at Berkshire Hathaway, because that’s what the business is all about.”

Buffett, who’s also chairman and head of investments, is preparing Berkshire for his eventual departure after more than four decades leading the firm. He hired investment manager Todd Combs to help run the company’s portfolio. Buffett has said his son, Howard Buffett, a Berkshire director, would be an effective non-executive chairman.

Preserving Culture

“He wants me to make sure that the culture’s not disrupted,” Howard Buffett said Feb. 25 in an interview with Bloomberg Television. “Maintaining it with the right CEO in place will not be that hard to do.”

Rose is among the Berkshire operating-unit CEOs that Buffett refers to collectively as “the All-Stars.” These executives, including Sokol and Abel, manage more than 70 subsidiaries across industries spanning insurance and energy, as well as luxury travel and consumer goods.

“Matt has said in the past that he is focused on running BNSF and is not interested in engaging in this kind of speculation,” Steve Forsberg, a spokesman for Burlington Northern, said in an e-mail.

Sokol, 54, came to Berkshire in 2000 after selling MidAmerican Energy Holdings to Buffett for $8.3 billion, including assumed debt. He is MidAmerican’s chairman after ceding the CEO job to Abel in 2008. Sokol became CEO of Berkshire’s NetJets subsidiary in 2009 and was praised by Buffett last year for halting losses at the unit.

Praising Executives

In his letter, Buffett lauded reinsurance lieutenant Ajit Jain and Geico car insurer CEO Tony Nicely for their performance. Buffett also cited Grady Rosier, who heads the McLane food distribution business, and Vic Mancinelli, who leads CTB Inc., a farm-products business.

Buffett hasn’t named candidates for the post of CEO. Paul Howard, director of research at Solstice Investment Research, said Rose may not be the most likely replacement for Buffett. Berkshire is more likely to pick a manager with a background in insurance or investments or one who, like Sokol, has been with the company for years, Howard said in an interview.

“For all we know, that list changes,” said Howard. “I wouldn’t be surprised if it’s a total name from left field and people are like, ‘Who is this guy?’”

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