“The highest form which civilization can reach is a seamless web of deserved trust. Not much procedure, just totally reliable people correctly trusting one another.”
Berkshire Hathaway has announced that Warren Buffett will step down as Chairman, effective immediately. Mr. Buffett will remain a member of Berkshire’s Board of Directors and has been named Chairman Emeritus. His son, Howard Buffett, was named Chairman. Susan Decker will remain Lead Independent Director and Greg Abel will continue to run the company as Chief Executive Officer.
These actions complete Berkshire Hathaway’s long-anticipated succession plan. Warren Buffett could still have a role to play as Chairman Emeritus. However, in most organizations, an emeritus title implies that an individual is no longer active. Mr. Buffett left the door slightly open in his letters, stating that “I still have the best job in the world.” He did not mention serious health conditions in his letter, aside from general comments on aging, so hopefully he will be able to serve as Chairman Emeritus for many years to come.
After taking over as CEO on January 1, 2026, Greg Abel sought to meet the unique challenge he faced by explaining his approach to managing Berkshire in his first annual letter to shareholders. Most notably, Mr. Abel was responsible for Berkshire’s acquisition of Taylor Morrison, which closed in July, and he resumed repurchases during the second quarter.
When Mr. Buffett announced his retirement at the end of the 2025 annual meeting, I wrote an article hoping that he would still have a few “final brushstrokes” left during his remaining time as CEO and as Chairman after his retirement from day-to-day management of the company. This has played out as I expected, although on a compressed timeline measured in months rather than years.
Berkshire Hathaway has built up tremendous goodwill with its shareholder base over many decades. For this reason, I am not as concerned about the lack of specifics in Berkshire’s recent communications as I would be at nearly any other company. Still, it is important to note that there are unanswered questions regarding how Berkshire will now operate with Warren Buffett as Chairman Emeritus. I am hopeful that these questions will be answered in due course. Perhaps Becky Quick will have the opportunity to interview Warren Buffett, Howard Buffett, and Greg Abel in the near future. If not, we have an upcoming 10-Q report in early November and the 10-K and annual letter in late February.
Here are three issues that I think should be explored in more detail:
Acquisitions and Repurchases
According to numerous reports this year, Greg Abel and Warren Buffett have been collaborating closely on questions of capital allocation. Mr. Abel initiated the Taylor Morrison acquisition, but he spoke to Warren Buffett about it first. The same pattern emerged when Mr. Abel was approached to invest in Alphabet’s private placement. Mr. Buffett has stated in recent interviews that he and Mr. Abel consult with each other on major capital allocation decisions and they would not proceed if they are not in agreement.
This collaboration is explicitly stated with respect to repurchases in Berkshire’s latest 10-Q:
“Berkshire’s common stock repurchase program currently permits Berkshire to repurchase shares any time that Berkshire’s Chief Executive Officer, after consultation with the Chairman of the Board, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.”
Presumably the language will change from “Chairman” to “Chairman Emeritus” in the next 10-Q since I doubt that Mr. Abel will consult with Howard Buffett regarding repurchases. But it raises a broader point: If Warren Buffett is no longer available to provide input on repurchases, would Mr. Abel have the ability to make decisions independently of the board? Would he consult with Howard Buffett? Or would a vote of the full Board be required? This same question extends beyond repurchases to major acquisitions as well.
Warren Buffett’s Voting Control
I have been concerned about Berkshire’s voting control for many years, anticipating the day when the majority of Warren Buffett’s shares will be converted from Class A to Class B and donated to philanthropy. To what extent does Berkshire’s culture depend on Mr. Buffett’s control of the company? Mr. Buffett has been slowly giving away his shares since 2006 and has been accelerating this process for several years.
In July, Mr. Buffett announced on CNBC that his remaining shares would be fully distributed by 2034. In a letter in late 2025, Mr. Buffett indicated that he would be accelerating his gifts to the family foundations, but we did not have a specific end date. We now know that eight years from now, Mr. Buffett’s shares will have been converted from Class A to Class B and distributed to his family foundations which are expected to liquidate the shares and make philanthropic gifts relatively quickly. Mr. Buffett does not want a permanent foundation to exist for several decades, preferring that his children give away his money.
As an outsider, I am not directly familiar with Berkshire’s culture within the operating subsidiaries or at headquarters. I have no doubt that the culture is strong and that Mr. Abel will do his best to keep the culture intact, but I think his job will become much harder once the Buffett family no longer has any say in the matter. Although Howard Buffett and Susan Buffett are on Berkshire’s board, their personal holdings of Berkshire are not large enough to have a material impact. It is only through the foundation holdings that they would exert voting power, and those holdings are expected to be liquidated and spent quickly.
Fortunately, this process will play out over eight years rather than eight months. I would be interested in Mr. Buffett’s view of how Berkshire’s voting control will evolve over this time and how confident he is that Berkshire will not trend toward becoming a more conventional company by the 2040s.
Dividend Policy
Berkshire’s dividend policy has been a perennial topic among shareholders for decades and I have been writing about it almost since starting The Rational Walk over seventeen years ago, most recently in an article in early 2024. For the most part, I have supported the current no-dividend policy since it is true that shareholders seeking “income” can generate it using a simple approach that I described a few years ago.
As long as Warren Buffett and Charlie Munger were in charge of capital allocation, shareholders were content with allowing enormous amounts of cash to build up on the balance sheet due to the optionality it gave two men who were undeniable geniuses of capital allocation. We knew that if there were no compelling opportunities, the funds would be invested in treasury bills, not frivolously wasted on vanity acquisitions or corporate bloat. Berkshire shareholders were generally well served by capital retention.
The question comes back to what “Chairman Emeritus” means at Berkshire Hathaway. Will Mr. Buffett continue to be actively involved in capital allocation decisions or is he effectively retiring?
Bringing up this issue is not an attack on Greg Abel’s capital allocation capabilities or commitment to Berkshire’s culture. It is simply an acknowledgement that the situation would be radically different in Mr. Buffett’s total absence. $360 billion of cash on the balance sheet is very difficult to justify without citing the optionality it gives to Mr. Buffett. Mr. Abel is a skilled operator and has significant capital allocation experience but he does not have Mr. Buffett’s record. Mr. Abel should always have significant cash at his disposal to consummate favorable deals quickly, but $360 billion seems excessive.
Of course, the question of return of capital is broader than dividend policy. Mr. Abel, with Mr. Buffett’s approval, has ramped up repurchase activity recently and this is likely to continue as long as shares trade at attractive levels. However, in my opinion, Berkshire will end up paying a dividend eventually and that day seems much closer at hand than it did yesterday. From a tax perspective, I hope that Berkshire will announce any change in dividend policy early in the year when dividends start to help shareholders plan.
Barring a major change in prevailing business valuations, I will be surprised if Berkshire is not paying a small regular dividend, possibly coupled with special variable dividends, by the end of the decade and I am incorporating this assumption into my personal financial and tax planning process.
Berkshire’s culture has long been based on a seamless web of deserved trust. As Mr. Buffett stated in his letter today, Berkshire’s culture and values are of paramount importance. Warren Buffett and Charlie Munger built a culture that is unlikely to ever be replicated from scratch which is why it is so important to preserve it. I am optimistic that the culture can last for a long time, but whether it will be intact by the middle of the century is not really knowable at this time.
Much depends on whether Greg Abel will have the shareholder support to run the company as it was historically run by Warren Buffett and Charlie Munger. I am hopeful that he will, not simply because I hope to retain the vast majority of my shares for decades but because I think that Berkshire’s example is very important to maintain in an increasingly corrupt business and political environment.
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Individuals associated with The Rational Walk LLC own shares of Berkshire Hathaway.