Two frontrunners have since emerged in the national media, Ajit Jain and Greg Abel. Warren Buffett himself once wrote to shareholders of Berkshire Hathaway that if he, his partner Charles Munger and his deputy Ajit Jain were even on a sinking boat and only one could be saved, “Swim to Ajit.”
But on Saturday, Munger also suggested that Greg Abel, who currently runs Berkshire’s energy business, is also a “worthy successor.” In his letter to shareholders marking 50 years of running Berkshire, Munger wrote, “Ajit Jain and Greg Abel are proven performers who would probably be under-described as ‘world-class’,” and Munger went as far as to say, “Each is a better business executive than Buffett,” in some ways.
Adding to the speculation, both men seem to fit Buffett’s description of an ideal Berkshire CEO. As reported by the Wall Street Journal, this person should be a “rational, calm and decisive individual who has a broad understanding of business and good insights into human behavior. It’s important as well that he knows his limits.”
Jain, who has spent almost 30 years at Berkshire, has always been considered a front-runner for the CEO position. In 2014, the group he heads, Berkshire Hathaway Reinsurance Group, contributed $42.5 billion to Berkshire’s total insurance “float,” which has enabled the company to continue to expand its investments and business options.
Jain is well-known for taking “large and unorthodox risks,” but these risks seem to always pay off. As CEO consultant Laura Rittenhouse said, “[Jain] excels as assessing and pricing unusual risks and also creates new, highly profitable businesses.”
Mr. Abel, a relative Berkshire newcomer, has significantly expanded the branch that he runs, Berkshire Hathaway Energy. According to the Insurance Journal, the company now operates natural gas pipelines from the Great Lakes region to Texas, and electric utilities in states including Oregon and Utah. Additionally, Berkshire Energy is one of the largest producers of wind and solar energy.
Ultimately, regardless of who is chosen (and a successor has already been chosen), Munger has made it clear that both individuals would remain with the company and would not change the tenets that have enabled Berkshire’s remarkable survival through the Recession, such as the use of cash for acquisitions and providing managers with significant amounts of autonomy.
Additionally, Buffett‘s son Howard is expected to become the company’s non-executive chairman as a “safety-valve” to ensure the incoming CEO is “up to the job.” Perhaps more importantly, Howard Buffett’s position will retain some of Berkshire’s ‘Buffett-magic’ that has soothed the minds of the company’s shareholders and will ensure them that much will continue as it always has.
(Photo courtesy of thetaxhaven)