On Saturday (May 3), the legendary figure in the American investment world, Warren Buffett, dropped a bombshell at the shareholders’ meeting by announcing his retirement as the CEO of Berkshire Hathaway at the end of the year, shocking the board of directors. Buffett stated that this was the news highlight of the day.
Greg Abel, the vice chairman of the non-insurance business, will take over as the CEO of the conglomerate after approval by the board of directors. The board plans to hold a meeting on Sunday (4th).
At 94 years old, Buffett mentioned that after stepping down, he will remain at Berkshire Hathaway to provide assistance but the “ultimate decision-making power” will lie with Abel.
Abel joined Berkshire Hathaway in 1999. In 2018, Abel was appointed as vice chairman, leading the company’s non-insurance business. As early as 2021, Abel was nominated as Buffett’s successor.
“I think it’s time for Abel to become the CEO of the company at the end of the year,” Buffett stated during the hosting of the 60th annual shareholders’ meeting, “I want to inform the board members of this appointment and use it as my recommendation.”
Buffett has been serving as the CEO of Berkshire Hathaway since 1970. The company’s name originates from an investment partnership acquired by Buffett in 1965—a textile factory.
The news of this succession surprised the board of directors, even Abel himself was not expecting it, as Buffett announced this significant decision as the annual shareholders’ meeting was about to conclude.
“This is today’s news highlight,” Buffett stated, “Thank you all for attending.”
Buffett mentioned that he had only discussed this decision with his two children (who are also board members), and the other members, including Abel, were unaware.
He plans to have the board “ponder on what questions, structures, or any other plans for the future, and then take action based on the opinions of the 11 directors at a meeting in a few months.”
“I believe they will unanimously support this decision,” Buffett said. “This means that by the end of the year, Abel will assume the role of CEO at Berkshire Hathaway. I will still stay on and may have a role in certain circumstances, but the final decision-making authority will rely on Abel’s views on operations, capital allocation, and other aspects.”
Lastly, Buffett stated that he does not intend to sell any Berkshire stock during the transition period and will gradually donate his holdings in the future.
Since Buffett acquired Berkshire Hathaway, the company’s earnings per share have grown at a compound annual growth rate of 19.9%, nearly twice the 10.4% annual increase of the S&P 500 index, resulting in a shareholder return rate of 5,502,284%. This means that $10,000 invested in Berkshire Hathaway in 1965 is now worth over $500 million.
Buffett continued, “I want to add: the decision to retain all shares is an economic decision because I believe under Greg (Abel)’s management, Berkshire’s prospects will be even better than when I managed it.”
He expressed that this decision also reflects his confidence in Abel’s leadership capabilities.