‘Total Surprise’: Warren Buffett’s Heir Apparent Resigns After Stock Purchases
- Posted on March 30, 2011 at 7:21pm by
Emily Esfahani Smith
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OMAHA, Neb. (AP) — A top executive of Berkshire Hathaway who was believed to be on the inside track to one day succeed billionaire Warren Buffett as CEO has resigned suddenly.
Buffett said Wednesday that David Sokol’s resignation letter, delivered by his assistant late Monday, came as a “total surprise.” But the resignation letter arrived less than two weeks after Buffett learned about stock trades that Sokol made before Berkshire announced its $9 billion acquisition of chemical company Lubrizol.
Buffett said Sokol, who had been serving as chairman of Berkshire’s MidAmerican Energy, NetJets and Johns Manville units, indicated that he wants to spend more time on philanthropy.
“As I have mentioned to you in the past, it is my goal to utilize the time remaining in my career to invest my family’s resources in such a way as to create enduring equity value and hopefully an enterprise which will provide opportunity for my descendents and funding for my philanthropic interests,” Sokol wrote.
Buffett said twice before, most recently about two years ago, Sokol had spoken to him of resigning for similar reasons but Buffett and other board members convinced him to stay with the company. He accepted Sokol’s resignation this time.
“I’m just totally shocked,” said Andy Kilpatrick, the stockbroker-author of “Of Permanent Value, the Story of Warren Buffett.“ ”It looked until a few minutes ago as if he (Sokol) was the guy.”
Buffett said he learned March 19 that Sokol bought and sold a couple thousand shares of Lubrizol in December and then purchased nearly 100,000 Lubrizol shares in early January about a week before recommending that Berkshire make a bid. Buffett said the decision, announced March 14, to offer $135 in cash for each share of Lubrizol was entirely his, but that the deal wouldn‘t have happened without Sokol’s early efforts.
Buffett said he doesn‘t believe those stock purchases were illegal because Sokol made them before he’d even suggested the Lubrizol deal, and said Sokol did mention in passing that he owned stock in the company when first bringing the deal up for discussion. Buffett also said that he didn‘t ask Sokol to resign and noted that Sokol told him that the stock purchases weren’t a factor in his decision to leave the company.
“Dave’s contributions have been extraordinary,” Buffett said.
Buffett declined to comment beyond his statement. Sokol did not immediately respond to a message left Wednesday.
Glenn Tongue, a managing partner at the T2Partners investment firm, said it looks like Buffett believed he needed to disclose Sokol’s Lubrizol purchases to investors.
“It appears as though it’s something that would have made Mr. Buffett uncomfortable,” Tongue said.
Buffett has regularly praised Sokol’s work, and many investors have speculated that Sokol was on the short list to succeed Buffett at the Omaha, Neb.-based company. Besides Sokol, the other Berkshire managers who are believed to be possible successors are Ajit Jain, who runs Berkshire’s reinsurance division; Greg Abel, president and CEO of MidAmerican; Tony Nicely, chief executive of Geico; and Burlington Northern Santa Fe CEO Matt Rose.
Tongue said Sokol‘s resignation shows why Buffett was smart not to name the candidates for Berkshire’s next CEO.
“To have named Sokol a successor at this point and have him resign would be bad,” Tongue said.
Eventually, Berkshire plans to split 80-year-old Buffett’s job into three parts – chief executive officer, chairman and several investment managers. Buffett remains in good health and has no plans to retire, but he says Berkshire’s board regularly discusses succession and knows who it would pick as CEO if an immediate need arises.
Due to Sokol’s departure, Buffett said Abel will become MidAmerican’s chairman; Todd Raba, president and CEO of Johns Manville, will become its chairman; and Jordan Hansell, President of NetJets, will become that unit’s chairman and CEO.
Berkshire owns roughly 80 subsidiaries, including clothing, furniture and jewelry firms, but its insurance and utility businesses typically account for more than half of the company’s net income. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co. Berkshire has more than 260,000 employees worldwide but only 21 at its headquarters in Omaha.
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Comments (52)
ElChupaCabraDeUSA
Posted on March 31, 2011 at 10:28amMaybe you didn’t hear Anthony Wiener clearly. You see David, when you are dead your family members don’t deserve any of your wealth so the government will take it…and that charity stuff? The government will handle that too.
Report Post »bkeely
Posted on March 31, 2011 at 10:18amCrooks in the stock trading business? Who would have thought!
Report Post »ThoreauHD
Posted on March 31, 2011 at 7:04amBuffet will probably give Obama the job after he finishes his master Soros’ work.
Report Post »AmericanStrega
Posted on March 30, 2011 at 10:08pmI bet he doesn’t have to worry….oh, forget it!
Report Post »DaveOregon
Posted on March 30, 2011 at 9:46pmDon’t agree that it was unethical – he bought shares for himself, saw after getting in tht it was good deal – probably had ethical issues if he did not bring it to Buffett and the Board – they bought in. So what? That he’s retiring – that may be the big story – jumping ship now – when Cavoto and many others are saying the economy is going to get much worse and the commercial real estate market is about to tank on their loans, etc. he probably figured now was the best financial time to “retire”. Don;tfigure this guy will not be pulling down big $$ to give speeches at Universities, private investment firms, etc. – so he can do philanthropy and still keep a good income coming in and get out before SEUI and the rest start picking his home, peeing on his car door handles, stalking his wife and kids, etc.
Report Post »vinny48
Posted on March 30, 2011 at 9:46pmAnd this is surprising how?? I bet good ole liberal democrat Buffet has a few stock trades that would make your head spin. Doesn’t it surprise anyone that he could be right just about every time?. That is BS. Look at most of the super rich I bet someone gave them an illegal tip or two. Martha Stewart ring a bell. Or the crook in jail for stealing everybody’s money. Sorry if I don’t worship the ground Buffet walks on, the last person who wants us to do do that is the moron in the White House.
Report Post »David Pasztor
Posted on March 31, 2011 at 7:17amVINNY48, your on the right track!! I have known a few millionairs in my lifetime, and the bottom line is they were all sort of sleezy, liars, cheaters, bull—-ers, and advantage takers at the drop of the hat. The rich are rich because they don’t waste any time “Sticking It” to everybody else.
Report Post »Duckterhook
Posted on March 30, 2011 at 9:30pmAlso……..Sokol and Soros both buy significant stakes in Lubrizol within a week’s time. Fasten your seatbelts, ladies and gentlemen and please….. keep your hands and feet inside the ride at all times.
Report Post »Duckterhook
Posted on March 30, 2011 at 8:55pmI’m in Omaha too. Something doesn’t add up here. Maybe if there was an election pending and Sokol was thinking about running, but nope……….
Report Post »LadyIzShy
Posted on March 30, 2011 at 8:43pmI bet he knows a TON of secrets bet someone shuts him up before he can talk
Report Post »1TrueOne55
Posted on March 30, 2011 at 8:33pmI bet he smelled the smoke of Evil and he is a God fearing man and he wanted to be on God’s side of the coming insurrection.
Report Post »ErinLindsey
Posted on March 30, 2011 at 8:26pmI’m in Omaha. I’ve met both Buffett and Sokol. (happened to be in the Berkshire’s flagship Dairy Queen store when they were there) Buffett is kind of irritating. Sokol seemed to be pretty nice. (plus a relative of mine knows Sokol and says he’s the nicest person)
I bet Sokol jumped ship because he didnt want to associate with Buffett and all the Obamabots (I did hear a few years ago he had health issues, wonder if those problems came back?)
Report Post »chickenlittle
Posted on March 30, 2011 at 8:18pmOFF TOPIC here, but I was just listening to Trump now on O’Reilly… Just gave a pretty pro-union little speech in the midst of Bill’s questions. Don’t know about you guys, but he‘s one I’m scratching off the list.
Report Post »LadyIzShy
Posted on March 30, 2011 at 8:42pmhe was NEVER on my list.. I have heard him for too many years.. he is doing this for publicity..
Report Post »chickenlittle
Posted on March 30, 2011 at 9:00pm@Lady… I suppose you’re right. He talked the right things on some stuff, but he’s basically just another sleazy loser morally. I forgot about the other day when he was talking about cheating in a business deal being OK if they’re bad guys. Talking up the unions with all their rhetoric will cost him any conservative support and publicity though.
Report Post »walkwithme1966
Posted on March 30, 2011 at 9:54pmI am surprised Trump was on anyone list to start with !! http://wp.me/pYLB7-OI
Report Post »Sovereigntist
Posted on March 30, 2011 at 7:55pmSomething smells here. Do you think Warren’s little buddy in the White House will allow the SEC investigate?
Report Post »1956Danelectro
Posted on March 30, 2011 at 7:50pmThey put Martha Stewart in prison for less……………
Report Post »GODBLESSOURCOUNTRY
Posted on March 30, 2011 at 10:15pmSeriously – if Martha had to do the time…
Report Post »eat-more-bacon-USA
Posted on March 30, 2011 at 7:47pmWarren Buffett lost all credibility when he jumped on the (o)bama bandwagon – perhaps Mr. Sokol just wanted to disassociate himself with anything “Buffett” – good for him.
Report Post »beckbotsrlame
Posted on March 30, 2011 at 9:02pmLost all creditability, who are you kidding? He was and is one the greatest long term investors in American companies and belief in the American way in the last century. Get a clue, BeckBot.
KARP4CY
Posted on March 31, 2011 at 12:51amResearch some of Buffett‘s hobbies and you’ll have your answer to his apparent partnership with this administration.
Report Post »heavyduty
Posted on March 30, 2011 at 7:43pmIt does make you wonder. But if he wants to go a different route to get rich I guess that’s up to him. Personally when it all goes to crap the rich and their money aren’t going to be any better off than the rest of us. The money won‘t be worth the paper it’s printed on.
Report Post »sWampy
Posted on March 30, 2011 at 8:30pmThese kind of people don’t have money, they own stuff, control cities, counties, states, countries, they don’t care if the economy crashes, they will keep their property and power, they will always have starving masses willing to do almost anything for crumbs off their tables.
Report Post »Mateytwo Barreett
Posted on March 30, 2011 at 7:41pmding, ding!! Is it time for round 2! Gotta be hell- yaknow!! In the trenches every day, working the contacts, crunching the numbers, massaging the clients, Trying to figure what stock is going to do- when all the banksare parking tons there. Hell to be on commikssion! Maybe he’ll open his own fund company. I gotta couple catchy title! Bernie’s too. How bout Goldman bags?
Report Post »psycodad36
Posted on March 30, 2011 at 7:55pmwe all rule in this country,with our votes and our conscience.
Report Post »psycodad36
Posted on March 30, 2011 at 10:45pmthat was meant for top of the game (appollogies)
Report Post »TOPOFTHEGAME
Posted on March 30, 2011 at 7:36pmIt’s $ure nice when your part of the RULING CLA$$ in America
Report Post »Its Gonna Getcha
Posted on March 30, 2011 at 7:34pmIf this has anything to do with Wallstreet and Charlie Sheen being in it…….. Oh Oh!!
Report Post »JoeBtfsplk
Posted on March 30, 2011 at 7:34pmslipperyerler!
Report Post »psycodad36
Posted on March 30, 2011 at 7:32pminsider (what)?
Report Post »psycodad36
Posted on March 30, 2011 at 7:38pmand i posted prior to pajamash,(it was retorical)
Report Post »MeteoricLimbo
Posted on March 30, 2011 at 7:30pmphilanthropic, there is that word again…..curiouser and curiouser
Report Post »CanteenBoy
Posted on March 30, 2011 at 7:30pmWho cares?
Report Post »TambourineInjury
Posted on March 30, 2011 at 7:27pmWhatevah
Report Post »BurntHills
Posted on March 30, 2011 at 7:24pmwonder who got to Sokol, obama or soros himself…
Report Post »Snowleopard {gallery of cat folks}
Posted on March 30, 2011 at 7:38pmMaybe Sokol seen the writing on the walls in the distance and jumped ship while he still can do so safely for himself and his family.
Report Post »pajamash
Posted on March 30, 2011 at 7:39pm“Buffett said he doesn‘t believe those stock purchases were illegal because Sokol made them before he’d even suggested the Lubrizol deal,…”
Yea, right!
“…and said Sokol did mention in passing that he owned stock in the company when first bringing the deal up for discussion.”
Uh-huh.
“…Buffett also said that he didn‘t ask Sokol to resign and noted that Sokol told him that the stock purchases weren’t a factor in his decision to leave the company.”
But now he has enough money (due to the stock purchases and subsequent take over by Birkshire) to do the things he always wanted.
HOW IS THIS NOT INSIDER TRADING AND ILLEGAL?!!!!!!!!!
Report Post »banjarmon
Posted on March 30, 2011 at 7:40pmWill Warren Buffett’s Heir have to pay inheritance tax???
Report Post »Showtime
Posted on March 30, 2011 at 7:41pmHmmmmm ~
“Buffett said twice before, most recently about two years ago, Sokol had spoken to him of resigning for similar reasons but Buffett and other board members convinced him to stay with the company. He accepted Sokol’s resignation this time.”
“….most recently about two years ago…..”
Yeah, I wonder if somebody got to him, too. Be interesting to see where he goes and what he does…with whom.
Report Post »TXPilot
Posted on March 30, 2011 at 7:55pmSounds like this guy got the word about whats coming and decided to jump ship.
Report Post »hersey10
Posted on March 30, 2011 at 8:19pmIf there was insider trading Bam and Stedman won’t let an investigation go forward because Bam has called on Buffet for photo ops .
Report Post »sWampy
Posted on March 30, 2011 at 8:24pmAt least he is honest enough to admit he wants to “philanthropy” work that will make sure his heirs are taken care of.
Report Post »poverty.sucks
Posted on March 30, 2011 at 9:28pmObamanation is philanthropy
Report Post »restorehope
Posted on March 31, 2011 at 12:06amSounds like Buffett is trying hard to cover Sokol‘s millionaire ’tuffitt’. How naive do they think people are? Oh, and I’ve got acres of beautiful farmland to sell you in the Everglades. Not.
Report Post »David Pasztor
Posted on March 31, 2011 at 7:03amSo it’s the same old story about another Stock Market “Swindler”, this guy is such a good liar that maybe they can find a spot for him on that TURD Obama’s team!! Yeah! He could be “The Secretary of Swindlers”. Him and TURD’BAMA can bend over in front of the TSA and accept the “MAGNETIC ANAL PROBE”!!!!!! Remember it’s for everyones “SAFETY”!!!
Report Post »tower7femacamp
Posted on March 31, 2011 at 10:23amcrooks of a feather flock together
Report Post »