Buffett says succession should be seamless

OMAHA, Neb. – Billionaire Warren Buffett tried to reassure thousands of his faithful followers on Saturday that the eventual transition to a new chief executive for Berkshire Hathaway Inc. will go smoothly, yet he offered few details about his chosen successor.

But shareholders at the annual meeting did learn about Berkshire’s latest acquisition and spent hours questioning the company’s top two executives.

Buffett mentioned in his annual letter to shareholders in March that the company board had chosen the person who eventually will succeed him, but the company has not said who that might be.

During the seven-hour gathering Buffett likes to call “Woodstock for capitalists,” vice chairman Charlie Munger told the crowd of about 24,000 people that Buffett has done such a great job of establishing Berkshire’s culture that there shouldn’t be problems.

“Do you really think he’s going to blow it when it comes time to pass it on?” Munger said.

Buffett, who has given no indication he plans to step down, said no formal training for the successor is necessary because the three Berkshire executives who he’s said would be capable chief executives are already part of the company’s culture.

Buffett rejected one suggestion that he consider stepping down as chief executive and remaining as chairman to ease the transition. He said the company doesn’t need an operations person because Berkshire’s companies mostly run themselves.

“We could have me do investments and an operating guy, but the truth is we don’t need an operating guy,” Buffett said.

Munger said he is in favor of the status quo.

“Speaking for the Munger heirs, I would rather the current method of operation would continue to wring the last bit of good out of Warren,” Munger said.

Berkshire owns a diverse mix of more than 60 companies, including insurance, reinsurance, carpet, jewelry, furniture, restaurants and utility firms. And it has major investments in such companies as H&R Block Inc., Anheuser-Busch Cos. and Coca-Cola Co.

Shareholders who have grown to expect big gains from their investment in Berkshire were eager to hear more about its latest acquisition and about plans that Buffett might have for the $42.9 billion cash the company held at the end of the first quarter, on March 31.

Berkshire said Friday it was acquiring an 80 percent stake in privately held Iscar Metalworking Cos., which makes metal cutting tools.

Iscar, an Israeli company, is the first business based outside the United States that Berkshire has bought into, Buffett said, although it owns several companies with overseas operations.

“I think you’ll look back on this in five or 10 years as a significant event in Berkshire history,” he said.