Warren Buffett released financial results for Berkshire Hathaway in a 22-page letter to investors on Saturday. What caught the headlines was that the world’s most famous CEO finally confirmed that a successor has been identified. While the 81-year-old declined to name the candidate, he reassured investors that the transfer of leadership would ultimately be “seamless”.
Buffet made a clever distinction in the announcement by highlighting that the news was about a succession plan and not identifying the replacement. With his characteristic talent for the sound bite he said, “This is not the if-I-get-hit-by-a-bus plan. This is the succession plan.”
Buffet in his letter went on to reassure: “Directors are “enthusiastic about my successor as CEO….When a transfer of responsibility is required, it will be seamless.”
The PR Verdict: “B” for Warren Buffet and his handling of a succession plan. A sensible strategy but sooner or later investors will begin to wonder if there is also a timeline in the works.
Less that 12 months ago Berkshire disclosed it had identified four current managers who were potential CEOs. But just weeks after that filing, David Sokol, considered the front-runner, quit when he was accused of violating the company’s insider trading policies. This was a major embarrassment for Buffett.
To avoid any further mis-steps it seems sensible to hold fire until the new person formally takes the seat. It keeps Buffett firmly in charge and protects the newly anointed from being exposed prematurely. The PR challenge will be to keep media and investors refraining from endless speculation, which can be just as distracting and divisive as not having a plan in the first place.