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BERKSHIRE HATHAWAY INC.

(BRK.A)
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Berkshire Chooses Greg Abel as Warren Buffett's Successor in CEO Role -- Update

05/03/2021 | 04:39pm EDT

By Geoffrey Rogow and Justin Baer

Longtime Berkshire Hathaway Inc. executive Greg Abel will one day succeed Warren Buffett as chief executive of one of the world's largest conglomerates, a sprawling company that owns such well-known firms as auto insurer Geico and fast-food chain Dairy Queen.

Mr. Abel, a 59-year-old Canadian, isn't expected to take the role immediately. He currently heads all non-insurance operations at Berkshire. He rose through the ranks in Berkshire's energy operations and has handled several large company acquisitions.

Some chief executives of Berkshire's many portfolio companies said Mr. Abel is on regular calls with them and Mr. Buffett, and separately checks in with them directly.

Investors described Mr. Abel as a level-headed presence likely to run the company in a similar way to Mr. Buffett.

"He is of the firm, he is with the firm and he knows how Warren has worked," said Thomas Russo, managing partner of Gardner, Russo & Quinn, a longtime Berkshire investor with more than $1 billion of shares.

Mr. Russo said Mr. Buffett's most important function is to serve as a business counselor to the many CEOs of Berkshire -- to answer questions and help allocate capital -- not to tell them how to run their business. Mr. Russo expects Mr. Abel to approach the role in the same way.

While Mr. Abel doesn't share Mr. Buffett's preference for the spotlight, he has increased his public persona in recent years. He was on stage with Mr. Buffett at Berkshire's annual meeting both this year and last year. This year, he handled questions about Berkshire's energy operations and the firm's ability to meet energy targets set by the Paris accords, should the U.S. re-enter the agreement.

Mr. Buffett has led Berkshire for more than 50 years, and the name of his successor has long been one of the best-kept secrets in corporate America.

Berkshire plays an outsize role in its importance as both an operating company that runs some of the most well-known brands in America and an investment firm with significant holdings in companies like Apple Inc., Coca-Cola Co., and Bank of America Corp.

The conglomerate has more than $140 billion in cash at its disposal.

Mr. Buffett has helmed Berkshire since 1965. Even as the company grew to be one of the largest in the world, it remained highly decentralized, with each operating business run relatively independently. Berkshire only employs about 25 people at its headquarters in Omaha, Neb.

In 2018, Berkshire promoted Ajit Jain, head of the company's reinsurance operations, and Mr. Abel to the firm's board and new jobs overseeing Berkshire's day-to-day operations. Mr. Jain works out of Stamford, Conn., and Mr. Abel is based in Des Moines, Iowa.

Over the weekend, Charlie Munger, Berkshire's longtime vice chairman, appeared to drop a major clue that Mr. Abel was the pick during Berkshire's annual meeting with shareholders. When asked about the importance of Berkshire's culture, Mr. Munger noted that "Greg will keep the culture."

On Monday, CNBC reported that Mr. Abel was next in line for the CEO role.

A person familiar with Berkshire's board confirmed to The Wall Street Journal that Mr. Abel is the current pick to replace Mr. Buffett should the 90-year-old billionaire leave the role imminently.

Mr. Buffett didn't immediately respond to a request for comment.

Mr. Abel's current remit includes railroad holdings, utilities, manufacturers, retailers and even auto dealerships. The noninsurance operations employ more than 250,000 people and are responsible for more than $150 billion in sales, Mr. Buffett said on Saturday.

"He does a far better job of that than I was doing previously," Mr. Buffett said at Saturday's annual meeting.

Mr. Abel was born in Edmonton, Alberta, in 1962. According to a biography of Mr. Abel when he won an award from the Horatio Alger Association of Distinguished Americans, the executive got his first job delivering advertising fliers to homes and worked as a laborer for a forest product company. He later graduated from the University of Alberta in 1984.

Before joining Berkshire, Mr. Abel worked at PricewaterhouseCoopers and CalEnergy, where he helped make the small geothermal firm into a more diversified energy business. The company, which merged with MidAmerican Energy Holdings Co., was bought in 2000 by Berkshire.

Mr. Abel sits on the board of Kraft Heinz Co., a couple mutual insurance companies and the Hockey Canada Foundation.

Outside of Mr. Abel, there are other succession plans for Berkshire.

Mr. Buffett's son, Howard Buffett, has been expected to succeed his father as chairman. And in the past decade, Todd Combs and Ted Weschler have joined Berkshire to help run the company's investment portfolio.

Mr. Jain continues to run Berkshire's insurance business. On Saturday, Mr. Buffett praised Mr. Jain -- previously considered to be in the running as the CEO successor -- saying, "He's built the world's leading property casualty insurance company."

Messrs. Jain and Abel described a respectful, communicative business relationship between the two of them.

Messrs. Buffett and Munger are known for their tight relationship. "We have never had an argument in 62 years," said Mr. Buffett, describing Mr. Munger as the "vice chairman of culture."

On Saturday, Mr. Buffett said choosing the wrong people to lead an organization is the No. 1 risk for businesses.

"You get a guy or a woman in charge of it -- they're personable, the directors like 'em -- they don't know what they're doing. But they know how to put on an appearance. That's the biggest single danger," Mr. Buffett said.

Some investors aren't worried about that potential in Mr. Abel. "He's the perfect person to lead Berkshire," said Paul Lountzis, president of Lountzis Asset Management, a longtime Berkshire shareholder. "Though I don't know who would want this job. There is no replacing Warren."

Write to Geoffrey Rogow at geoffrey.rogow@wsj.com and Justin Baer at justin.baer@wsj.com

(END) Dow Jones Newswires

05-03-21 1638ET

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Financials (USD)
Sales 2021 264 B - -
Net income 2021 30 386 M - -
Net cash 2021 10 500 M - -
P/E ratio 2021 21,6x
Yield 2021 -
Capitalization 665 B 665 B -
EV / Sales 2021 2,48x
EV / Sales 2022 2,35x
Nbr of Employees 360 000
Free-Float 75,7%
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Mean consensus OUTPERFORM
Number of Analysts 3
Average target price 455 166,67 $
Last Close Price 437 131,00 $
Spread / Highest target 6,38%
Spread / Average Target 4,13%
Spread / Lowest Target 0,66%
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Managers and Directors
NameTitle
Warren Edward Buffett Chairman & Chief Executive Officer
Marc D. Hamburg Chief Financial Officer, Secretary & Senior VP
David Sanford Gottesman Independent Director
Walter Scott Independent Director
Charlotte M. Guyman Independent Director
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