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At 95, Warren Buffett is stepping back from Berkshire Hathaway, naming Greg Abel as CEO and outlining lessons on succession, philanthropy, and leadership. He also highlights steps such as accelerating US$500mn in annual gifts and urging leaders to choose the right role models and lead with kindness.
Warren Buffett, CEO of Berkshire Hathaway announced he will no longer write Berkshire Hathaway’s annual report or speak at the annual meeting, describing his move as “going quiet.” He will continue communicating with shareholders through his annual Thanksgiving message.
He confirmed that Greg Abel will become CEO at year-end, praising him as “a great manager, a tireless worker and an honest communicator,” and expressing confidence in Abel’s long-term leadership.
Early life and formative experiences
Buffett reflected on his childhood in Omaha, recounting a near-fatal illness in 1938 and the care he received from his family doctor, Dr Harley Hotz. He recalled the support of teachers and relatives, including his third-grade teacher Miss Madsen and his Aunt Edie, who provided him with a fingerprinting set that sparked a lifelong curiosity.
He described early life in Omaha as shaping his values, citing the importance of friendships and early connections. Influential figures included Charlie Munger, Stan Lipsey, Walter Scott Jr., Don Keough, and Greg Abel, all of whom lived near him at various times and later played significant roles in his personal and professional life.
Omaha as a lifelong base
Although Buffett spent brief periods in Washington, DC, and New York, he returned to Omaha permanently in 1956. He highlighted Omaha as the foundation for raising his family and building Berkshire Hathaway. He noted that the city’s environment, schools, and local connections provided a platform that contributed to both personal and corporate success.
Longevity and the role of luck
Buffett acknowledged that reaching age 95 was unexpected, given his family’s longevity history and his own health challenges. He credited “wise, friendly and dedicated Omaha doctors” for saving his life on multiple occasions.
He reflected on the role of luck, emphasising that survival to old age requires avoiding hazards such as accidents, natural disasters, and other risks. Buffett also recognised that his upbringing in the United States gave him advantages not available to many others worldwide.
Succession planning and philanthropy
Buffett addressed succession for both Berkshire and his personal philanthropic plans. His three children, now in their 60s and 70s, are positioned to manage his charitable foundations. To ensure timely and effective disbursement of funds, he is accelerating lifetime gifts, which currently exceed $500mn annually.
He stressed that his children have the maturity, judgment, and experience needed to manage these responsibilities. Alternate trustees are in place to address any premature deaths or disabilities, ensuring continuity of decision-making. Buffett noted that his children do not need to perform miracles or fear failures, as their goal is to “improve somewhat upon what generally is achieved by government activities and/or private philanthropy.”
Maintaining shareholder confidence
Buffett plans to retain a significant portion of Berkshire “A” shares until shareholders develop confidence in Greg Abel similar to what he and Charlie Munger enjoyed. He highlighted Abel’s deep knowledge of Berkshire’s businesses, including the insurance operations, and his ability to understand both potential opportunities and risks.
He expressed hope that Abel remains in good health for decades and projected that Berkshire may require only five or six CEOs over the next century. Buffett also emphasised that the company should avoid CEOs motivated by short-term wealth, dynastic ambitions, or early retirement.
Leadership challenges and observations
Buffett highlighted potential risks in leadership transitions, including the possibility of CEOs or subsidiary leaders developing dementia or other debilitating illnesses. Boards and executives must remain vigilant to prevent failures that could affect company performance.
He also discussed executive compensation, observing that disclosure rules intended to moderate pay have often backfired. Comparing CEO pay across companies can create envy and competitive pressures, inadvertently inflating salaries rather than controlling them.
Berkshire’s outlook and resilience
Buffett described Berkshire’s businesses as having “moderately better-than-average prospects.” He noted that the company is managed to ensure its existence benefits the United States and avoids becoming a supplicant. While acknowledging that stock prices may fluctuate, sometimes falling 50% or more, he expressed confidence in the management and board’s ability to maintain long-term stability.
Personal reflections on leadership
Buffett concluded with advice on personal and ethical leadership. He urged learning from mistakes, choosing the right role models, practising kindness, and treating everyone with respect.
“Keep in mind that the cleaning lady is as much a human being as the chairman,” he advised.
He also emphasised that true greatness comes from helping others. He said: “When you help someone in any of thousands of ways, you help the world. Kindness is costless but also priceless.”
Buffet concluded by encouraging readers to choose heroes carefully, emulate their behaviours, and strive for continuous improvement.
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Lead image / CNN
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