Berkshire Hathaway Inc on Wednesday promoted two of its top executives, Gregory Abel and Ajit Jain, cementing their status as the most likely successors to Warren Buffett to run the conglomerate.
Abel, 55, the chief executive of Berkshire Hathaway Energy, was named Berkshire’s vice chairman for non-insurance business operations, while Jain, 66, Berkshire’s top insurance executive, was named vice chairman for insurance operations.
Both were also added to Berkshire’s board, increasing the number of directors to 14 from 12.
Buffett, 87, will remain chairman and chief executive, and Charlie Munger, 94, who has worked at Buffett’s side for more than four decades, will keep his vice chairman post.
Both will continue handling major capital allocation and investment decisions, including acquisitions.
In an interview on CNBC, Buffett said the changes are “part of the movement toward succession over time,” saying Abel and Jain “have Berkshire in their blood” and are “the two key figures” at the Omaha, Nebraska-based company.
Buffett said it was Munger’s idea to make them vice chairmen, and that it would be valuable to whoever succeeds him to manage a large portion of Berkshire.
He also dismissed the idea of a horse race between Abel and Jain for the top job.
“They know each other well, they like each other well, they both have their areas of specialty,” he said.
Buffett, who has run Berkshire since 1965, said health concerns were not a factor in the announcement’s timing, and that he still feels “terrific,” adding that “maybe six weeks ago, I just decided, ‘Why not now?'”
He declined to say how long he expected to remain at the helm but allowed: “Ten years would be a long time.”
OTHER SUCCESSION PLANS
Berkshire has more than 90 operating units including the BNSF railroad, Geico auto insurance, Dairy Queen ice cream, Fruit of the Loom underwear, See’s Candies, and a variety of industrial and chemical operations.
While Berkshire remains best known for insurance and reinsurance, that sector now generates only about one-fourth of operating results as the company has diversified.
Abel, who grew up in Alberta, joined Berkshire Hathaway Energy in 1992. His Iowa-based unit now runs several power companies in the United States, Canada and Britain, as well as natural gas pipelines and solar and wind farms.
Many investors and analysts have said Abel is a more likely successor than Jain to Buffett, in part because he is younger.
Jain, who joined Berkshire in 1986, runs Berkshire’s reinsurance operations, providing coverage against major catastrophes and generating tens of billions of dollars of premiums for Berkshire to invest.
Buffett, the world’s third-richest person according to Forbes magazine, has long said Jain has probably made more money for Berkshire than he has.
In the CNBC interview, Buffett repeated that Berkshire’s board, whose members include Microsoft Corp co-founder Bill Gates, will be ready to install a new chief executive within a day should he step down, die or become incapacitated.
Speculation that Abel and Jain were the top candidates grew after Munger singled them out as “world-leading” performers in a 2015 letter to Berkshire shareholders.
Todd Combs and Ted Weschler, who are Buffett’s investment deputies, are expected eventually to succeed Buffett as Berkshire’s chief investment officer.
Buffett’s eldest son, Howard, meanwhile, is expected to become Berkshire’s non-executive chairman, to help preserve the company’s culture.