As Warren Buffett acknowledged, the issues of corporate leadership, succession and death is something of an "urgent" question at Berkshire Hathaway, given that he's 89 years old, and his vice-chairman Charlie Munger is 96.
Warren Buffett, one of the most successful investors of all time with an estimated net wealth of US$90.2 billion, has some advice for business leaders in his annual letter as CEO to Berkshire Hathaway shareholders.
It is a brutal truth that most business leaders find hard to admit to: Planning for your departure, however long or short that may be.
Warren Buffett in his letter to Berkshire Hathaway stockholders took nine words to address it.
The brutal truth billionaire Warren Buffett addressed was about leadership, corporate succession and death.
As Buffett acknowledged, it’s something of an “urgent” question at Berkshire Hathaway, given that he’s 89 years old, and his vice-chairman Charlie Munger is 96.
“Charlie and I long ago entered the urgent zone,” Buffett wrote. “That’s not exactly great news for us. But Berkshire shareholders need not worry. Your company is 100 percent prepared for our departure.”
If you build a successful company people depend on you. In Buffett’s case, those people are shareholders. Company CEOs have to consider workers, their families, and other stakeholders. To perform and keep faith, they need to know what happens if you can no longer be the leader.
Berkshire Hathaway in 2018 named two new vice-chairman as part of a succession plan on which investors had long sought insights. Investors will this year have the opportunity to ask the two men, Greg Abel and Ajit Jain, questions at Berkshire Hathaway’s AGM in May, Buffett said.
He also wrote that he had directed the executors of his will not to sell Berkshire shares on his death.
Almost his entire net worth (99%) is tied up in Berkshire Hathaway stock, Inc reported.
He said he had never sold any of his shares but had given some away as gifts and charitable donations and he had to trade some Berkshire Hathaway stock in 1980 for regulatory reasons, in exchange for stock of a bank he had bought.
Buffett’s will requires his executors and the trustees to hold onto his Berkshire holdings for years after his death. Buffett wrote that he believes the restrictions he’s put in place mean “it will take 12 to 15 years for the entirety of the Berkshire shares I hold at my death to move into the market.”
Munger’s family’s net worth is similarly tied up, Buffett said, and the message is clear: Berkshire’s leaders wouldn’t be so heavily leveraged in their own company if they didn’t have faith in the people who will lead it after they’re gone.
“Key to my ‘Berkshire-only’ instructions is my fate in the future judgment and faith of Berkshire directors,” Buffett said.
Berkshire Hathaway reported a profit of US$81.4 billion last year, up from US$4 billion the year before.