Greg Abel Steps into the Spotlight
Greg Abel will step into the spotlight at the 2026 Berkshire Hathaway annual meeting with Warren Buffett sitting in the audience.
“… At year-end Greg would be the Chief Executive Officer of Berkshire. I would still hang around and could conceivably be useful in a few cases. But the final word would be what Greg said, in operations, in capital deployment, whatever it might be.
I could be helpful, I believe, in certain respects if we ran into periods of great opportunity or anything. … But Greg would have the tickets. Whether it’s acquisitions – I think the board would be more welcome to giving him more authority on large acquisitions probably if they knew I was around. But Greg would be the chief executive, period.”
— Warren Buffett
Warren Buffett’s announcement at conclusion of the Berkshire Hathaway annual meeting on May 3 took nearly everyone by surprise. While there were some signs that a change might be coming prior to the meeting, many shareholders assumed that a major announcement would occur at the beginning of the meeting, so it was a shock when Mr. Buffett made his announcement right before adjourning. Initially, it was not clear whether Mr. Buffett would remain Chairman, although this was cleared up a couple of days later.
We have since learned that Mr. Buffett decided to retire after finally feeling the effects of his age. Apparently, his energy level has declined in recent years and it has become more difficult to read printed materials, including newspapers. While Mr. Buffett acknowledged forgetting names occasionally, he appeared entirely capable of discussing the business during more than four hours of questions at the annual meeting, although it was impossible to miss that he was struggling with a raspy voice.
As I wrote two weeks ago, I’ll take Mr. Buffett at his word regarding his reasons for stepping down as CEO. It is inconceivable that anything material is being hidden regarding his health given his prior willingness to disclose health conditions in 2000 and 2012 and his criticism of companies that fail to provide health disclosures. If Mr. Buffett is facing any health crisis likely to impact his performance between now and yearend, he would have told shareholders at the annual meeting and most likely would have opted to step down immediately rather than after eight more months.
Starting in 2026, Mr. Buffett will no longer be under any obligation to make detailed disclosures of his health status, and perhaps that is part of his motivation. The last thing most of us want to do is air our medical challenges in public, but that’s one of the obligations of being the chief executive of a public company.
How active will Warren Buffett be as Chairman of Berkshire Hathaway? This has been an open question over the past two weeks. As Mr. Buffett said at the meeting, he will remain involved, especially when large opportunities arise in times of crisis. Subsequent media reports revealed that he will continue going to the office. How will this work in practice? Will Greg Abel relocate to Omaha and work alongside Mr. Buffett? Will Mr. Abel feel a need to “clear” major decisions with Mr. Buffett? Regardless of what Mr. Buffett might say, I can see how Mr. Abel would feel an obligation to Berkshire’s Chairman and largest shareholder.
Perhaps these open questions being raised by shareholders led to Mr. Buffett decision to no longer appear on stage at future annual meetings. The spotlight will now be on Greg Abel, with Mr. Buffett sitting in the front row of the audience with the rest of Berkshire’s Board of Directors and executives. Presumably, Mr. Abel will want to continue having Ajit Jain appear on stage to answer questions regarding the insurance business and Mr. Buffett’s daughter, Susan, will also be on stage to answer questions.
While Mr. Buffett’s decision to no longer take questions is disappointing to many shareholders, it makes sense if the reins are truly being handed over to Mr. Abel. As long as Mr. Buffett is on stage, he will inevitably be looked upon as Berkshire’s leader and nearly all audience questions will be directed to him rather than to Mr. Abel. The audience questions are just as likely to be about “life advice” and other topics totally unrelated to Berkshire’s business. With Mr. Abel under the spotlight, it is likely that nearly all questions will pertain to Berkshire’s business which will improve the overall quality of the annual meeting.
Actions speak louder than words. By stepping back, Mr. Buffett is sending a strong message to Mr. Abel that he will truly be Berkshire’s face to the public and will be fully in charge starting on January 1, 2026.
This does not mean that Mr. Abel will have quite as much authority as Mr. Buffett had as CEO, especially when it comes to acquisitions. On many occasions, Berkshire’s board only learned about a major acquisition once it was already a fait accompli. This was acceptable with Mr. Buffett as CEO, given his sixty year track record and status as the company’s largest shareholder, but it would be poor corporate governance for any other CEO, including Mr. Abel. Mr. Abel will have to determine when it is appropriate to chart his own course and when he should consult with Mr. Buffett and the rest of the board.
What about dividends and repurchases? It seems likely that Mr. Buffett has shared his detailed thinking about intrinsic value with the board, so the policy regarding share repurchases is not likely to change materially, at least for the foreseeable future. Mr. Buffett’s views on dividends are clearly negative, and the board will be responsible for declaring dividends. Mr. Abel will be able to provide his input on these matters, but ultimately Mr. Buffett will continue to have the normal influence of a board chairman on these policies. He will also continue to control ~30% of the vote, providing a virtual veto on proposals he disagrees with.
When it comes to being a shareholder of Berkshire Hathaway, many things that might initially seem odd make sense in the fullness of time. My initial reaction on May 3 was that Mr. Buffett should have announced his decision at the start of the meeting rather than at the end. However, if he had done so, nearly every question would have been about succession rather than the operations of the business which would have been undesirable. I also was disappointed when I read that Mr. Buffett will no longer be on stage at future annual meetings, but this also makes sense if Mr. Abel is to feel like he’s truly in charge.
Mr. Buffett’s daughter said that it was “way better” for her father to retire now rather than to serve until his death, which was the previous plan. She also said that her father has no regrets about the decision. While many details remain unknown, especially regarding the management structure Mr. Abel will put in place once he is in charge, shareholders have reason for confidence based on decisions made so far.
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