A surprise has just been handed to Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-B). David Sokol is resigning from the company. He has been considered one of Warren Buffett’s potential heirs to run the company. Buffett swears that Sokol’s resignation was a surprise and that this departure was to go create equity value and an enterprise to create value for his descendants as well as to fund his own philanthropic interests. At issue is exactly what happened in this Lubrizol Corporation (NYSE: LZ) acquisition and that Sokol had tried to resign before.
Buffett went on to discuss how Sokol owned shares in Lubrizol before he suggested that Berkshire Hathaway acquire Lubrizol Corporation (NYSE: LZ), but Buffett noted that Sokol had no decision on whether or not to acquire Lubrizol and in no way was there any legal issue in that ownership. Buffett also said the resignation letter press release is all he knows regarding the matter.
Buffett claims that two prior resignation attempts were made by Sokol, but this was still a surprise resignation turned in by Sokol’s assistant. Here is the replacement strategy named:
- Greg Abel, presently President and CEO of MidAmerican Holding Company, will become its Chairman;
- Todd Raba, President and CEO of Johns Manville, will become its Chairman;
- and Jordan Hansell, President of NetJets, will become its Chairman and CEO.
David Sokol had been considered at least one possible replacement for Warren Buffett when he decides to retire. Now it seems that Ajit Jain will now be considered even more of a front-runner for the job. What Buffett said before in an annual letter: “If Charlie (Munger), I and Ajit are ever in a sinking boat – and you can only save one of us – swim to Ajit.”
Berkshire Hathaway’s B shares are trading lower in the after-hours session down more than 2% at $53.53 after having closed up 0.9% at $85.46 in regular trading today.
JON C. OGG
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