MW Warren Buffett's succession plan has begun. Here's what a longtime insider is watching.

By Lawrence A. Cunningham

Naming Greg Abel as CEO of Berkshire Hathaway is just the first step

Berkshire Hathaway's durability was never about blind loyalty to Buffett. It has always rested on mutual respect and earned trust.

Commentators rightly extol Warren Buffett's unique leadership, investment acumen and cultural stewardship - qualities that will be missed after Buffett retires as CEO of Berkshire Hathaway $(BRK.A)$ $(BRK.B)$ at the end of the year, passing the baton to Greg Abel.

But when tributes to Buffett veer into predictions that Berkshire Hathaway's best days are behind it, they overlook his greatest legacy: an organization designed to outlast him.

Read: Buffett passes the torch - here's what Berkshire loyalists should know, from a longtime insider

Berkshire's succession plan is not a single move. It's a multistep transition of leadership and trust - carefully constructed over decades - to ensure the survival of a distinctive business model. Naming Abel as Buffett's successor is just Step 1.

As CEO, Abel will oversee Berkshire's sprawling operations, deploy its capital and serve as its public face. He's already doing much of that as vice chair of Berkshire's board and overseer of all non-insurance operations.

Abel has earned the respect of Berkshire's subsidiary managers, navigated acquisition markets and presented with calm command at several recent annual shareholder meetings. He has overseen billions in investments at Berkshire Hathaway Energy and has taken leadership on the company's sizable Japanese holdings.

While Abel shares Buffett's emphasis on decentralization and autonomy, he is known to be less tolerant of underperformance. He is not a showman - and won't pretend to be. Instead, Abel may choose new ways to connect with shareholders, perhaps by featuring a rotating cast of Berkshire subsidiary CEOs on stage at the annual meeting.

Read: Buffett successor Greg Abel will have around $350 billion to use in making his mark on Berkshire Hathaway 2.0

Step 2 focuses on Berkshire's two chief investment officers, Todd Combs and Ted Weschler.

Buffett will no longer serve as Berkshire's chief investment officer. In his later years, he has increasingly relied on others, including Weschler, who is likely to manage the equity portfolio along with additional like-minded investors. Abel will be accountable for overall results but will rely heavily on on the stock-picking expertise of those Berkshire teammates.

Step 3 in the transition process involves the insurance business and Ajit Jain, vice chair and head of insurance operations.

Abel is not an insurance man - and he knows it. Berkshire's insurance operations remain under the leadership of Jain, whose deep experience and bench of internal successors ensure continuity at the company's core businesses, from Geico to GenRe and including Alleghany.

Warren's role - and Howard's

Howard Buffett will not try to fill Warren Buffett's shoes - rather, he'll work to keep them from being trampled.

Next up is Buffett's role as chair of the board. For the first time in Berkshire's history, the roles of chair and CEO will be split. Buffett will remain chair, retaining significant influence, while Abel runs the company day to day. Upon Warren Buffett's death, the longstanding plan remains for his son Howard Buffett to succeed him as chair.

The role of chair is widely misunderstood. Howard will not be a shadow CEO or investment chief. Instead, he'll serve as cultural guardian for the company, with a mandate to preserve the values that make Berkshire unique: permanence, autonomy and promise-keeping. Unlike many sons of legendary founders, Howard will not try to fill his father's shoes - rather, he'll work to keep them from being trampled.

Warren Buffett - controlling shareholder

At the annual meeting on May 3, Buffett emphasized that he will not sell a share of Berkshire's stock. His continued ownership gives Abel formidable protection from shareholder activism for as long as Buffett lives. When he dies, his estate plan calls for a gradual transition: His Class A shares - with their high voting power - will be converted into Class B shares and sold into the market over a 10-year period.

The result will be twofold: Buffett's direct influence will wane, but the relative voting power of other long-term Class A shareholders will rise. That base - known for its loyalty to the Berkshire model - will then play the decisive role in sustaining it.

Now read: Pope Leo XIV's election: Pope Francis, like Warren Buffett, mastered the art of succession

Of course, nothing is automatic. These structures and safeguards are not self-enforcing. Long-term shareholders will support the model only if its performance justifies continued trust. But that's as it should be. Berkshire's durability was never about blind loyalty to Buffett. It has always rested on mutual respect and earned trust.

Will the Berkshire model endure?

Berkshire's model challenges conventional corporate practice. It resists short-term pressures, avoids dividends unless reinvestment returns are inferior, and refuses to overpay for buybacks. It operates as a conglomerate while conglomerates fall out of fashion, and piles up cash while others rush to distribute it. Buffett and Berkshire have proven that these features, once seen as eccentric and even now often underappreciated, are icons of a rational, long-term capitalism.

Whether that model survives will not depend on Abel alone - or on Weschler, Jain or even Howard Buffett. It will depend on shareholders. Do they still believe in a model based on trust? One that says a great business can be owned, not flipped? Guided, not gamed?

If they do, Berkshire will continue to thrive - not because of Warren Buffett's genius, but because of what he built to outlast it.

Lawrence A. Cunningham is the director of the John L. Weinberg Center for corporate governance at the university of Delaware and an author of many books on Berkshire Hathaway. He is also a longtime shareholder of Berkshire Hathaway.

Read more about Buffett and Berkshire Hathaway:

-- How investors should think about Berkshire's stock price without Buffett

-- Here's the real reason Berkshire Hathaway holds almost $350 billion in cash right now

-- Warren Buffett offered this timely investment advice after a tumultuous April for equities

-- 6 ways investing like Warren Buffett can boost your 401(k

-- How Warren Buffett went from picking horses to picking stocks - and what you can learn from it

-Lawrence A. Cunningham

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 09, 2025 15:36 ET (19:36 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.