In his latest letter, Berkshire Hathaway's CEO, Warren Buffett, at 93, reflects on the future of the company and his personal legacy, revealing significant decisions about the succession and the management of his vast wealth.
Buffett expresses confidence in the current leadership, naming Berkshire Vice Chairman Greg Abel, who oversees the non-insurance businesses, as the likely successor. This announcement aligns with Berkshire Hathaway's long-term strategic planning, ensuring continuity in its leadership.
Buffett has made a substantial contribution of $866 million in Berkshire stock to four family philanthropies, demonstrating his ongoing commitment to philanthropy. He acknowledges that he is in the latter stages of his life, using the metaphor of "playing in extra innings" to describe his current phase.
A notable revelation in Buffett's letter is the role of his three children—Howard, Susan, and Peter Buffett—as executors of his will and trustees of the charitable trust that will inherit over 99% of his wealth. This decision reflects a shift in Buffett's approach, as he notes their preparedness for this significant responsibility has evolved since 2006. The siblings, aged between 65 and 70, with Howard and Susan serving on the Berkshire board, are required to act unanimously in administering the trust. Buffett emphasizes the importance of having designated successors due to the unpredictability of life.
Since 2006, Buffett has been actively donating his Berkshire stock, reducing his ownership to a 15% stake, currently valued at $118 billion. His latest donation involved converting 1,600 Class A shares into 2.4 million Class B shares. Despite fluctuations in Berkshire's stock value, Buffett remains a significant shareholder, with the Class A stock priced at approximately $547,625 and the Class B stock at around $361.
Buffett's philosophy on wealth and philanthropy is clear: he does not favor the creation of a lasting philanthropic organization like the Ford Foundation. Instead, he believes in the timely and efficient distribution of his wealth posthumously to maximize its impact. The testamentary trust he mentions will be self-liquidating within a decade or so, operating with minimal staff, and primarily funded by Berkshire shares.
He shares a belief with his children that dynastic wealth, while common and legal, is not desirable. They collectively recognize that wealth does not inherently bring wisdom or vice and maintain a critical perspective on capitalism, acknowledging its flaws and disparities but also its remarkable achievements.
Buffett assures that Berkshire Hathaway, one of the world's largest and most diversified companies, is well-prepared for future challenges. He acknowledges the inevitability of human errors in any large organization but expresses confidence in the company's ability to rectify mistakes, attributing this to the competent CEO and Board of Directors in place.
In the short term, Buffett's significant holdings in Berkshire will continue to influence the company's direction. He foresees that Berkshire will eventually earn its reputation based on its performance and merits. He highlights that decay in large institutions, whether governmental, philanthropic, or profit-seeking, is not inevitable and believes Berkshire has been strategically built to endure.
Buffett concludes with transparency about the disposition of his assets after his death. He opts for a straightforward approach, with no complex trusts or foreign entities to obscure public scrutiny. His will, which will be publicly available for inspection at the Douglas County Courthouse, reflects his commitment to openness and simplicity in managing his legacy.
