With Berkshire Hathaway Inc. adding two senior executives to its board of directors this week, speculation is that the company’s 87-year-old CEO Warren Buffett’s eventual heir may be filling one of the seats.
The company announced this week that Gregory E. Abel has been named as vice chairman of noninsurance businesses and Ajit Jain has been named as vice chairman of insurance operations, expanding the board from 12 to 14 members. The move could pave the way for the two new board members to assume larger leadership roles in the future.
“Jain and Abel are being anointed jointly as they are expected to run Berkshire jointly one day, with Jain as senior partner, following in the tradition of Buffett and his junior partner, Charlie Munger,” Jeff Cunningham, professor of global leadership at Arizona State University’s Thunderbird School of Global Management told Chief Executive. “The move addresses the requirement of all of Berkshire’s top brass to refrain from ego or greed in any way, shape or form. No one person is king, no one person matters more than the whole.”
“Jain and Abel will be a corporate tag team, two heads better than one, similar to Buffett and Munger.” – Jeff Cunningham
Abel, 55, currently serves as chairman and CEO of Berkshire Hathaway Energy Company, which he joined in 1992. Jain, 66, leads Berkshire’s reinsurance operations in his current role as executive vice president of National Indemnity Company. He has been with Berkshire Hathaway Insurance Group since 1986.
Cunningham believes the move fits perfectly with Berkshire Hathaway’s corporate culture, as Buffett and Munger have worked in concert to run the company successfully for many years.
“Jain and Abel will be a corporate tag team, two heads better than one, similar to Buffett and Munger,” Cunningham says. “Warren knows his own investment philosophy may be better than most, but not always perfectly accurate, and he relies on Munger to tell him when he’s dreaming. In anointing [Jain and Abel] as vice chairs to the Berkshire board, Warren is doing what he always does: making smart but consequential moves slowly after a period of testing and thinking.”
While plans for succession at Berkshire Hathaway progress behind closed doors, Buffett has been upfront about planning for his succession and his own ability to lead the company at his advanced age.
“Buffett has had a false step or two in planning his succession but has been fairly transparent about his intentions and his own health,” senior associate dean for leadership studies at the Yale School of Management Jeffrey Sonnenfeld told Chief Executive. “He has been eager to discuss his concern for this process whereas [NewsCorp CEO Rupert] Murdoch has not been.”
The CEO has refuted the idea that this week’s board moves are related to his health, telling MSNBC “I feel terrific. I love what I do. I can’t wait to go to the office in the morning.” However, Buffett did concede that the appointment of the two new vice chairs is “part of a movement to succession over time.”