November 26, 2020

DealBook: Potential Buffett Successor Suddenly Quits

David SokolDaniel Acker/Bloomberg NewsDavid Sokol.

David Sokol, a potential successor to Warren E. Buffett at Berkshire Hathaway, has abruptly resigned, according to a company announcement.

The resignation comes as Mr. Sokol’s investment in Lubrizol, a specialty chemicals company that Berkshire recently announced it would acquire, faces some scrutiny.

“Dave brought the idea for purchasing Lubrizol to me on either Jan. 14 or 15. Initially, I was unimpressed, but after his report of a January 25 talk with its C.E.O., James Hambrick, I quickly warmed to the idea,” Mr. Buffett said in a statement. “Though the offer to purchase was entirely my decision, supported by Berkshire`s board on March 13, it would not have occurred without Dave`s early efforts.”

Mr. Sokol purchased 2,300 shares of Lubrizol on Dec. 14, which he then sold on Dec. 21, according to Mr. Buffett. On Jan, 5, 6 and 7, Mr. Sokol bought 96,060 shares “pursuant to a 100,000-share order he had placed with a $104 per share limit price,” Mr. Buffett’s statement said.

“Neither Dave nor I feel his Lubrizol purchases were in any way unlawful,” Mr. Buffett said. “He has told me that they were not a factor in his decision to resign.”

Mr. Buffett said in the company announcement that he did not ask for Mr. Sokol’s resignation, which “came as a surprise to me.” Mr. Sokol had twice before mentioned resigning, but Mr. Buffett was able to persuade him to say, he said.

“Dave’s contributions have been extraordinary,” Mr. Buffett said.

Mr. Buffett said he had spoken with Mr. Sokol the previous day and “received no hint of his intention to resign. This time, however, I did not attempt to talk him out of his decision and accepted his resignation.”

The announcement included an excerpt from Mr. Sokol’s resignation letter.

“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 descendants and funding for my philanthropic interests,” he said. “I have no more detailed plan than this because my obligations from Berkshire Hathaway have been my first and only business priority.”

Mr. Sokol, 54, helped run several Berkshire subsidiaries, including MidAmerican and NetJets, and has been seen as Mr. Buffett’s right-hand man.

Mr. Buffett has said he has no plans to step aside anytime soon. Still, the succession race at Berkshire has been among the most watched in America. Mr. Buffett, 80, has previously said he was likely to split his job in two — into separate chief executive and investing functions.

Mr. Buffett has spent years getting the right people in place. In late November, Berkshire tapped Todd Combs, manager of a small hedge fund in Connecticut, to potentially succeed him as chief investment officer. Mr. Combs was hired to oversee a sizable portfolio that would likely grow as he got comfortable with it and Berkshire’s operations.

Article source: http://feeds.nytimes.com/click.phdo?i=61f535f95c2a916fe3e21224f60fdc84

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