Why Warren Buffett picked Greg Abel— not his own children— to lead Berkshire Hathaway |
On May 3, one of the most accomplished investors in history, Warren Buffett finally announced his decision to step down from the position of CEO of Berkshire Hathaway at the age of 94. While the news was much anticipated, what surprised everyone was Buffett’s decision to choose Greg Abel over his own children as his successor at Berkshire Hathaway. But, what made Warren Buffett reject nepotisim and instead choose and outsider to run the trillion dollar company? Read on to know more:
Who are Warren Buffett’s children and why are they not leading Berkshire Hathaway?
For the unversed, Warren Buffett has three children: Howard, Peter, and the late Susan (Susie) Alice Buffett. Although all three received substantial gifts from their father, they were excluded from Berkshire Hathaway’s executive succession plan.
Warren Buffett’s net worth is estimated to be around $168 billion, but his children have kept a relatively low profile. Their personal net worths aren’t publicly known, and they haven’t built high-profile businesses or major fortunes of their own. Since 2006, Buffett has donated about $3 billion in Berkshire Hathaway stock to each of his children’s charitable foundations— and he plans to leave them another $2 billion each in his will.
Also, for the last 15 years on every Thanksgiving, Buffett has also gifted them stock worth around $2 billion annually for their foundations. While his financial support has been generous, Buffett made it clear that leadership at Berkshire Hathaway would be based on merit—not family ties.
That’s why Greg Abel, not one of Buffett’s children, has been named his successor. Greg Abel, a Canadian executive, has been managing the company’s non-insurance operations since 202,1 and he has now been chosen as the next CEO of Berkshire Hathaway.
Abel will run the company, while Buffett remains on as an advisor. None of his kids hold senior management roles at Berkshire. Howard Buffett might take on a symbolic role as non-executive chairman, but not an active leadership position.
Buffett has always believed that massive inheritance can actually hold people back. He once said parents should “leave children enough so they can do anything, but not enough that they can do nothing.” And so, it seems, instead of grooming his children to lead Berkshire, he’s encouraged them to focus on philanthropy.
But when it comes to leadership, Buffett’s message is clear: Build a future based on values, not bloodlines.
