2008: What's Buffett's latest succession plan?

AUDIENCE MEMBER: My name is John Ebert (PH). I’m from Bremerton, Washington. I’m very pleased to see that both you and Charlie look so healthy, and I’m also glad to know that your goal is to work to at least 102 before you retire.

I think your secret must be the Cherry Coke and the See’s Candy by evidence of what you’re doing on the screen there.

My question, obviously, deals with succession. At last year’s meeting, you spoke about your plan for your chief financial officer. Could you please update us on where you stand on succession?

WARREN BUFFETT: Yeah. And we’ve said, on the CEO front, we have three that any one of which could step in and do a better job than I do in many respects.

And the board is unanimous, I believe, in terms of knowing which one it would be if it were tomorrow morning, but that might be different two or three years from now.

I think in any event, when the time comes, they’ll want to pick somebody reasonably young, because I think, on balance, it’s good idea to have a long run at this job, and I think it aids in acquisition and being able to make promises to people about how their businesses will be treated and so on.

In terms of the investment officer, the board has four names. We’ve discussed the four. Any one or all of the four would be good at doing my job, probably better in some ways, and — but they all have good jobs now. They’re happy where they are now.

They would — I think any one of the four would be here tomorrow if I died tonight and they were offered the job by the board. They’re all reasonably young. They’re all very well to do or rich, and compensation would not be a major factor with them.

I think any of the four would take the job at less money than they’re making now, but there’s no reason for them to come now.

I would still end up making the decisions, and they would probably chafe at the idea of not being able to make the decisions.

I actually worked for Ben Graham for a few years. And I loved the man enormously. I learned an amount from him. I named my older son, middle name, is after him.

But in the end, I wanted to make decisions, and I — if Ben Graham made them differently — you know, I actually prefer to make my own decisions. And anybody that manages money well is going to feel that way.

So it’s just better in this case. It can happen tomorrow. It could happen five years from now. But whenever I’m not around to make the decisions, the board will decide whether to have one, two, three, or four of these people.

They’ll decide — you know, they may decide to have four and divide it up four ways. They may decide to have only one. They will probably be heavily influenced by how the incoming CEO feels about exactly how he wants to work with a group or with one.

And they’ll come. So there will not — there will be no — there will be no gap after my death in terms of having somebody managing the money, and they’ll probably be a lot more energetic than I am now.

And they’ll — they could very easily have a much better record. Some of them have a much better recent record than I do.

Charlie?

CHARLIE MUNGER: Well, you know, we still have a rising young man here named Warren Buffett. And having — (Applause)

WARREN BUFFETT: That’s the advantage of working with a guy 84. You always look young. (Laughter)

CHARLIE MUNGER: And I think we want to encourage this rising young man to reach his full potential. (Laughter and applause)

WARREN BUFFETT: One thing I should point out, with our average age being 80, people talk about aging managements. We haven’t found a management that isn’t aging. If we ever find them, we want to start eating what they eat.

And what I can point out about your management, since our average age is 80, we’re only aging at the age of 1 1/4 percent a year, and that is the lowest rate of aging that I know of in corporate America.

I mean, some of these companies have 50-year-olds, and they’re aging at 2 percent a year, and just think how much riskier that is. (Laughter)