Buffett fails to dispel investor angst over succession plan

Tue Mar 4, 2014 4:16am EST
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By Luciana Lopez and Jonathan Stempel

(Reuters) - Warren Buffett is seeking to reassure shareholders about how his Berkshire Hathaway Inc (BRKa.N: Quote) will perform in the decades after he steps down or dies, but remains as vague as ever about succession plans.

And that means some followers of the 83-year-old billionaire's huge insurance and investment company remain far from comforted by his words, and worry about how well Berkshire can thrive without him.

"I don't know of any good examples of an iconic CEO like Buffett ever being successfully followed," said Meyer Shields, an analyst with Keefe, Bruyette & Woods, Inc.

Examples from the last 15 years show how hard this can be.

Jeff Immelt, the CEO at General Electric Co (GE.N: Quote), has been unable to get his company's share price anywhere near the heights achieved by his predecessor Jack Welch. Steve Ballmer had similar problems following Bill Gates at the helm of Microsoft Corp (MSFT.O: Quote).

And after a strong start in following the iconic Steve Jobs, Apple Inc (AAPL.O: Quote) CEO Tim Cook has had some major struggles in the past 18 months and the company's share price is well off its highs.

One problem for any successor is that Buffett, by dint of his long stewardship of Berkshire and the outperformance he has delivered over most of the past half century, has the freedom to make mistakes or underperform the stock market in ways that could cost other CEOs their jobs.

"I feel sorry for the person who follows in his shoes," said Dave Sather, president at Sather Financial Group, which invests more than 5 percent of its $365 million of assets under management in Berkshire.   Continued...

Warren Buffett, co-chair of the 10,000 Small Businesses Advisory Council, takes part in a panel discussion following a news conference announcing a $20 million partnership to bring Goldman Sachs' 10,000 Small Businesses initiative to the city of Detroit, Michigan November 26, 2013 file photo. REUTERS/Rebecca Cook