Warren Buffett ends rocky week by announcing heir apparent

As Warren Buffett's public profile took some rare hits, the 'Oracle of Omaha' moved Saturday to shore up Berkshire Hathaway's future by locating a successor.

|
Shuji Kajiyama/AP
In this Nov. 21, 2011 photo, billionaire investor Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks during a news conference in Iwaki, Japan. In his annual shareholder letter Saturday, Buffett told Berkshire Hathaway shareholders that the company has someone in mind to replace him eventually.

In announcing, though not naming, a successor at Berkshire Hathaway, US billionaire Warren Buffett moved Saturday to shore up concerns about the future of his investment firm amid rare criticisms of a man seen by many as a model baron of industry.

Hailed for promoting his Giving Pledge, a promise by the super-rich to donate their wealth to charity after their deaths, and commended more recently by many Democrats for his call for wealthy investors to pay the same tax rate as middle-class Americans, Buffett has become the paragon of a billionaire with a heart.

Buffett's announcement to shareholders on Saturday that he had found a specific successor to run Berkshire Hathaway after his retirement or death came after a fourth quarter that saw Berkshire profits drop by 30 percent, largely because of bets on volatile real estate derivatives.

IN PICTURES: Who are the richest people in the US?

While the firm, which owns over 70 companies – from railroads to chocolate-makers -- and also invests in Wall Street stocks, outpaced the Standard & Poor's average for the 39th year in a row, uncertainty about succession at the company has, according to some experts, plagued its worth.

Buffett said in a 22-page letter to shareholders on Saturday that he has no plans to leave the company, but that the board of directors has agreed on a specific person to run the firm once Buffett steps down. Buffett wrote that "when a transfer of responsibility is required, it will be seamless, and Berkshire's prospects will remain bright."

Outside of Wall Street, Buffett's public persona has grown over the last year as he's emerged as a key economic adviser to President Obama, who named a plan to raise the tax rate for investment income over $1 million to mirror payroll tax rates for the middle class the “Buffett Rule.” Buffett, who received the Medal of Freedom from Obama last year, famously said he shouldn't pay taxes at a lower rate than his secretary.

The proposal came after Buffett, a spry octogenarian, wrote a strongly-worded op-ed in the New York Times last year, which played into a national conversation spawned by the Occupy Wall Street movement about income inequality.

“I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get,” Buffett wrote last year in the New York Times op-ed. “But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate."

“My friends and I have been coddled long enough by a billionaire-friendly Congress," he wrote. "It’s time for our government to get serious about shared sacrifice.”

But as Buffett moved to shore up succession at Berkshire, his public profile also took some unusual hits. Frustration with Buffett's appeals for others to pay higher taxes boiled over when New Jersey Gov. Chris Christie said on Piers Morgan's CNN show that Buffett “should just write a check and shut up” instead of advocating for higher tax rates.

“The fact of the matter is that I’m tired of hearing about it,” Gov. Christie said. “If he wants to give the government more money, he’s got the ability to write a check — go ahead and write it.”

That rebuke gave an opening to media critics, who contend that Buffett has been uncritically hailed as an impartial voice of reason by supporting a number of Obama White House gambits, including industrial bailouts, even while he stood to profit from some of those initiatives. Buffett says he makes investment decisions based on data available to every other investor.

Citing an Obama administration foreclosure settlement with Bank of America that boosted Buffett's BofA holdings by $154 million overnight, libertarian commentator Matt Welch of Reason magazine, wrote on CNN, “The man who has become the left's favorite billionaire in the service of bashing plutocrats could be perceived as the single most successful crony capitalist in the country.”

In his shareholder letter, Buffett also criticized himself for spending $2 billion on a bond purchase "that tanked shortly after our purchase and remains depressed ... [I]n tennis parlance, this was a major unforced error by your chairman."

But despite an unusually rough week for the “Oracle of Omaha,” there's little doubt that Buffett's unique brand of billionaire populism continues to resonate. A majority of Americans support Buffett's broader notion of raising taxes on the super-rich. A January CBS News/New York Times poll found that 55 percent of Americans believe that the rich pay too little in taxes.

IN PICTURES: Who are the richest people in the US?

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Warren Buffett ends rocky week by announcing heir apparent
Read this article in
https://www.csmonitor.com/USA/2012/0225/Warren-Buffett-ends-rocky-week-by-announcing-heir-apparent
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe