Warren Buffett Reassures Shareholders on Cancer and Succession
Warren Buffett reassured the tens of thousands of Berkshire Hathaway shareholders attending its annual meeting in Omaha today that his health is good and the next CEO will do a good job.
Buffett referred to his recent diagnosisof early prostate cancer and his decision to have radiation treatment as a "non-event."
He says he's listening to his four doctors and joked that he's eating well, pointing to the assortment of See's Candies and Coca-Cola products on the table in front of him.
He suggested that while he could be killed by a "jealous husband," there is almost no chance he'll die from the prostate cancer.
Buffett's partner Charlie Munger had his own joke, saying he "resents" all the attention Buffett is getting, especially since he probably has more prostate cancer that Buffett does.
But, Munger notes, he doesn't know for sure because he doesn't have himself tested.
Buffett added to Munger's joke, saying he sought attention because he thought his secretary was getting too much for her role in his "Buffett Rule" tax argument.
Buffett also reassured shareholders on succession, telling them whomever eventually replaces him as Berkshire's CEO will be able to manage risk and make good business deals. "We're not going to have an arts major in charge of Berkshire."
Asked if anyone else could have negotiated Berkshire's multi-billion dollar preferred stock and warrant deals with General Electric, Goldman Sachs, and Bank of America at such favorable terms, Buffett acknowledges that he had special skills in those instances. But he says the next CEO will be able to make deals and will bring his own skills to the job.
Asked who will be managing Berkshire's derivatives position after he's gone, Buffett replied the company won't have much of a derivatives book after, or even while, he's still around.
Buffett also told shareholders that at the end of March he increased the portfolios managed by Combs and Weschler by $1 billion each to $2.75 billion.
"With both Todd and Ted, Charlie and I were struck not only by a good record but by intellectual integrity, quality of character, a real commitment to Berkshire." He also noted that Combs did a lot better than the benchmark S&P 500 stock index last year.
Asked if Berkshire managers might be more likely to leave under a new CEO, Buffett said, "I virtually know that the successor we have in mind will not be the kind who will turn off our managers because the successor in mind has the culture and the people embedded as I do."
Part of that culture, says Buffett, is to give managers a "brush" and let them "paint their own painting" without interference. That allows them to retain their passion for what they do, a passion that helps them be good at what they do.
It's not a matter of money. "A majority could retire and wouldn't need to work at all. They're only going to work if it's more fun for them to work than anything else in the world."
Berkshire has never hired a compensation consultant, and "never will" because they simply tell their employers what they want to hear. Says Munger, for "compensation consultants, prostitution would be a step up."
Even though money isn't the main factor for Berkshire managers, Buffett says they are indeed paid very well.
Buffett says Berkshire is still looking for a big acquisition, revealing that he recently considered a $22 billion dealfor an unnamed target but couldn't get it done. He liked the potential buy so much he was ready to sell some stock that he would have preferred to keep.