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Buffett said at the weekend that Berkshire Hathaway had a plan if his eventual replacement as chief executive was not up to the job. Buffett’s son Howard, as non-executive chairman, would be able to deal with an underperformer, the billionaire said in a letter published on Saturday for shareholders.
“If elected, Howard will receive no pay and will spend no time at the job other than that required of all directors,” Buffett wrote. “He will simply be a safety valve to whom any director can go if he or she has concerns about the chief executive.”
Buffett, 84, used the letter to lay out his vision for Berkshire’s next decades, 50 years after he took over a struggling textile mill that he turned it into one of the world’s largest companies.
He has said the board spends a lot of time considering who the next chief executive should be, though he has not publicly named the candidates.
One of Howard Buffett’s roles as non-executive chairman would be to help preserve the company’s culture, the billionaire has said. The son, 60, has been a director since 1993.
Buffett is aiming to make 2015 a celebratory year. He took control of Berkshire five decades ago and transformed it from a struggling textile maker into a sprawling business empire. Early on, he bought insurers, then used premiums from those businesses for stock picks and acquisitions. Operations now include electric utilities, manufacturers, retailers and one of the largest US railroads.
Berkshire Hathaway said at the weekend that fourth-quarter profit slipped 17 percent as investment gains narrowed and underwriting results deteriorated at insurance units.
Results
Net income fell to $4.16 billion (R48.46bn), or $2 529 per share, from $4.99bn, or $3 035, a year earlier, Omaha, Nebraska-based Berkshire said on Saturday on its website. Operating earnings of $2 412 per share missed the $2 702 estimate of three analysts surveyed.
While investment results can cause volatility in earnings, Berkshire now derives most of its income from operating subsidiaries. Even as underwriting profit decreased 52 percent at the insurance units to $191 million, Berkshire’s dozens of other operations posted a 10 percent increase in earnings to $3.03bn.
Full-year net income rose to $19.9bn from $19.5bn in 2013, which had been a record. Book value, a measure of assets minus liabilities, climbed to $146 186 per share at the end of December from $144 542 three months earlier.
Underwriting results slipped in the fourth quarter at Geico and at Berkshire’s two main reinsurance businesses. Investment income at the insurance units also fell, dropping 2.7 percent to $880m.
Berkshire agreed to spend $7.8bn on 31 bolt-on deals last year, with Duracell the largest. The cash pile rose to a record $63.3bn on December 31 from $62.4bn three months earlier. –
Bloomberg