April 28 (Bloomberg) -- Microsoft Corp. co-founder Bill Gates, recruited by his friend Warren Buffett to join the board at Berkshire Hathaway Inc., said he’s committed to the firm for the rest of his life.
Gates and fellow Berkshire board member Don Keough, the former president of Coca-Cola Co., said in separate interviews with Bloomberg Television that their role with Omaha, Nebraska- based Berkshire is to protect the company’s culture and values after Buffett, 78, steps down. Buffett has pledged the majority of his Berkshire shares to Gates’s charitable foundation.
“I’ve got a commitment to stay involved with Berkshire as a lifelong thing,” Gates, 53, said in an interview scheduled to be broadcast today. “We always have to think about what might happen and make sure Berkshire is not just great now, but forever.”
Buffett, Berkshire’s chairman and chief executive officer, has said the board’s most important job will be to replace him when he’s unable to perform his duties. He will host about 35,000 people on May 2 at Omaha’s Qwest Center arena for the annual shareholder meeting -- an occasion where he typically fields questions about the succession plan.
“It’s the most important issue there is,” Buffett said in an interview with Bloomberg Television at Berkshire’s headquarters last month. “There’s nothing more important. Nobody knows on any given day where I’ll be the next day.”
‘Intense and Real’
Buffett built Berkshire over four decades from a failing manufacturer of men’s suit linings into a $140 billion company by investing in out-of-favor stocks and buying dozens of businesses ranging from insurance and underwear to ice cream and utilities. Buffett says his ideal time horizon to hold a stock is “forever,” and he purchases operating companies for Berkshire with the promise to their owners never to sell them.
“When you’re sitting on the board, you’re talking about sustainability of Berkshire Hathaway long-term, the issue of management down the road,” said Keough, 82. “The culture he’s built into Berkshire is intense and real and, I think, permanent.” Berkshire is the largest shareholder in Coca-Cola, and Buffett served on the soft-drink maker’s board with Keough.
Buffett said in letters to shareholders and at past annual meetings that the chairman post will go to his son, Howard Buffett, to keep the culture intact, and said the remainder of his work will be split between at least two people: a CEO and person or group that handles investing.
‘Total Confidence’
“All candidates currently work for or are available to Berkshire and are people in whom I have total confidence,” he said in the company’s most recent annual report. Buffett said in an interview March 5 that the CEO candidates hadn’t changed in a year. He declined to name them.
“You could water-board me,” and he still wouldn’t tell, Buffett joked.
Berkshire stockholders and Buffett-watchers have long speculated about who will fill the CEO position. Barron’s has reported that David Sokol, the head of Berkshire’s MidAmerican Energy Holdings Co., was the most likely successor. Sokol said in an interview with Bloomberg Television he hasn’t discussed succession with Buffett.
“Never a word,” Sokol said. “Unfortunately my name comes up because people try to come up with names.”
Tony Nicely, the head of Berkshire’s Geico Corp. car insurance business, and Ajit Jain, who runs a unit that sells reinsurance, are also on media lists of potential successors. Buffett biographer Alice Schroeder, now a Bloomberg News columnist, has suggested Buffett adviser Byron Trott, formerly at Goldman Sachs Group Inc., is an ideal candidate.
Charitable Foundation
Gates’s commitment to Berkshire mirrors Buffett’s pledge to the Bill & Melinda Gates Foundation, a charity established by Gates and his wife to fight disease and global poverty. Buffett in 2006 promised to give the majority of his Berkshire shares to the foundation, in 5 percent annual increments, as long as Gates or his wife is still alive and managing the foundation.
His grant, valued at about $31 billion at the time it was made, also stipulates that the stock payments may be accelerated in the event of Buffett’s death.
Forbes magazine in March ranked Gates as the richest person in the world, and listed Buffett as second. The two men have known each other since 1991, according to Schroeder’s book, when they met at a party outside Seattle celebrating July 4, the U.S. Independence Day.
“As soon as I sat down with him, he was asking me, ‘Why didn’t IBM do this,’ and ‘why wasn’t Microsoft doing that’, and he was asking the questions that I’ve always waited for somebody to ask,” Gates said in the interview. “We just got into this conversation where the whole day went by.”
Gates owns 300 Berkshire shares personally and another 4,050 through his Cascade Investment LLC according to a regulatory filing last month. The stake was valued at more than $390 million based on yesterday’s closing price of $90,000 a share.
(Portions of the interviews with Buffett, Gates, Keough, Trott and Sokol will be broadcast today starting at 5 p.m. New York time, as part of a special about Berkshire Hathaway airing on Bloomberg Television and at BTV on the Bloomberg terminal.)
To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net; Betty Liu in New York at bliu17@bloomberg.net. Last Updated: April 28, 2009 09:05 EDT
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