Warren Buffett announced in Omaha on Saturday that he will soon requireBerkshire HathawayThe company's board of directors asked Greg Abel to succeed him as CEO at the end of the year, signaling the end of an era.
Although Buffett is 94 years old and Abel was named as CEO successor in 2021, it was still a surprise to the thousands of appreciative shareholders who attended this year's annual meeting to hear the investment legend's views on the company's future again.
"Tomorrow, we have a meeting of Berkshire's board of directors, and we have 11 directors. Two of the directors are my children, Howie and Susie, and they know what I'm going to talk about." Buffett said in the last few minutes of the meeting: "This will be news to other people, but I think the time has come for Greg to become CEO of the company at the end of the year."
In 1965, Buffett purchased a then-defunct New England textile mill and, over more than 60 years, transformed the company into a unique conglomerate with businesses ranging from Geico insurance to the BNSF railroad. At a time when Berkshire's stock price had just reached a new high and its market value was approaching $1.2 trillion, Buffett handed over his power in a high-profile manner.
The "Oracle of Omaha" said he will still "stay" to help, but the final decisions about the company's operations and capital deployment will rest with the 62-year-old Abel. Abel is currently Berkshire's vice chairman of non-insurance operations.
"I believe that in some ways I can be helpful if we hit a big opportunity or something," he said.
As Berkshire's largest shareholder, Buffett owns more than $160 billion in shares. He said he would not sell a single Berkshire stock as he transitions to this new phase.
"I would add that the decision to keep all the shares was an economic decision because I think Berkshire's prospects will be better under Greg's stewardship than mine," Buffett said. Buffett walked around the meeting on crutches, but he answered four hours of questions with an energy and clarity that was surprising for his age.
On Saturday, Buffett heaped praise on Abel in front of about 40,000 shareholders, saying his more hands-on management style worked better for Berkshire's more than 60 subsidiaries.
"It's much better to be with Greg than with me because, you know, I don't want to work as hard as he does," Buffett said. "I can get away with it because our business is basically good, very good."
The Canadian executive was born in Edmonton, Alta., and spent 25 years as a Berkshire executive. Abell joined Berkshire in 2000 when it acquired MidAmerican Energy and eventually became CEO in 2008. Prior to that, Abel worked at CalEnergy, where he transformed a small geothermal company into a diversified energy company.
In terms of capital allocation, Abel said that he will inherit Buffett's patient value investment style and is ready to deploy Berkshire's huge $347 billion cash fortress whenever there is a good opportunity.
"It's really the investment philosophy and how Warren and his team have deployed capital over the past 60 years," Abel said. "Really, that's not going to change. That's the approach we're going to take going forward."
What is Buffett's new role?
After the shareholder meeting, Buffett and Abel told CNBC's Becky Quick that the two would discuss Buffett's formal role next year at Sunday's board meeting. Buffett is also currently the group's chairman.
"I think they'll be unanimous in their support," Buffett said Sunday of the board's upcoming CEO decision.
Therefore, it is unclear whether Abel will also assume the role of chairman. Buffett said earlier this year that his son, Howie Buffett, would serve as non-executive chairman after his death to preserve the company's culture. It's unclear whether the move will affect that decision.
"It surprised me, but it also impressed me," Berkshire director Ron Olson said after Saturday's shareholder meeting. "I'm very eager to see Warren become Greg Abell's Charlie Munger."
After Buffett's surprise announcement (apparently, Abel didn't even know it was coming), the meeting ended with a standing ovation for Buffett.