April 29, 2005 in Business

Two richest men are teaming up

Joe Ruff Associated Press
 
Associated Press photo

Billionaires Bill Gates and Warren Buffett, play a hand of bridge during the Omaha bridge tournament in 2000, in Omaha, Neb. Their friendship goes back to 1991.
(Full-size photo)

OMAHA, Neb. — Warren Buffett and Bill Gates, who became the world’s richest men on very separate paths, will be working together after this weekend to help guide one of the world’s most successful conglomerates.

Shareholders of Buffett’s company, Berkshire Hathaway Inc., are expected to officially vote Gates onto the board of directors, cementing a friendship between billionaires that goes back to 1991. Just what the Microsoft Corp. chairman’s presence on the board might mean for Berkshire is not clear, but Gates could help the company plan for a future without its legendary 74-year-old founder.

Buffett may be looking for someone of his own caliber to continue on the board after he is gone, said Terry Connelly, dean of Golden Gate University’s Ageno School of Business in San Francisco

“Both are entrepreneurs,” Connelly said. “Both have distinctive insights into the same set of facts everyone else sees.”

Robert Miles, author of two books about Buffett, said Gates, 49, has already overseen a transfer of control at Microsoft, having handed his CEO title to Steve Ballmer in 2000.

“He has built an entity and passed it on to another CEO, which is an important role the board has after Warren,” Miles said.

Buffett has said he would never retire as chairman and chief executive officer of Berkshire, short of physical or mental incapacity. In the event of his departure, Buffett has said three people would be needed to replace him. His eldest son, Howard, a Berkshire board member, would become chairman. Two Berkshire executives whom Buffett has not named would run the company, one to handle operations and the other to handle investments.

Buffett controls the company, which has a market value of around $130 billion, with nearly 40 percent of the stock, worth more than $40 billion. Berkshire invests in companies in traditional businesses like newspapers, soft drinks and insurance. Besides Berkshire, Buffett is on the boards of Coca-Cola Co. and The Washington Post Co., two companies in which Berkshire has large stock holdings. Buffett was not conducting interviews, said his assistant, Debbie Bosanek.

Gates is worth more than $46 billion as founder of the world’s largest software company. He owns about $300 million in Berkshire stock and was appointed to the board in December, to fill the vacancy left by the July death of Buffett’s wife, Susan. Gates was traveling and was not available to comment for this article, Microsoft spokesman Corey duBrowa said.

Gates’ appointment, which shareholders must formally approve, marks the first time he and Buffett have been on the same board, though they have been friends since meeting at a social event in Seattle in 1991. When Gates became engaged to his wife, Melinda, in 1993, they bought an engagement ring at Berkshire-owned Borsheim’s jewelry story in Omaha; Buffett met them at the airport. Melinda Gates is also a member of the Washington Post board, where Buffett also sits.

The board is not powerful because Buffett owns controlling interest in Berkshire, but that will change in the future, Miles said.

“They will be a lot more powerful after he is gone, when the CEO doesn’t control that large block of stock,” he said.

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