With Berkshire Hathaway billionaire Warren Buffett's chief lieutenant resigning last Monday, the leadership at MidAmerican Energy Holdings Co. has moved up CEO Greg Abel to chairman to fill the place of David Sokol, 54, Buffett's long-time go-to executive and potential successor to the Berkshire throne.
In announcing Wednesday that Sokol's resignation was a "surprise," Buffett said the conglomerate had been very successful in recent years in large part because of Sokol, calling his accomplishments "extraordinary," and adding that at MidAmerican, Sokol and Abel "delivered the best performance of any managers in the public utility field."
Buffett stirred up Wall Street after the markets had closed with the announcement that Sokol had submitted his resignation to strengthen his family's financial resources. Buffett accepted the resignation, although in two previous instances over the past few years he and the Berkshire board had talked Sokol out of similar resignation announcements.
In what Buffett disclosed of Sokol's resignation letter, the departing senior executive said that his goal was "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. I have no more detailed plan than this because my obligations from Berkshire Hathaway have been my first and only business priority."
The resignation followed Berkshire announcing it was buying specialty chemicals firm Lubrizol on the recommendation of Sokol, who had purchased nearly 100,000 shares of the company for about $10 million earlier this year. Buffett and his board decided on March 13 to buy Lubrizol. It was not until just a few days later (March 19) that Buffett learned about Sokol's stock purchase, he said.
Noting that there was nothing illegal about the transaction, Buffett said "the offer to purchase was entirely my decision, supported by Berkshire's board, [but] it would not have occurred without Dave's early efforts."
During a Thursday morning interview on CNBC, Sokol maintained that he did nothing wrong regarding the Lubrizol acquisition, but allowed that if he had it to do over again, he would do things a bit differently.
"Knowing today what I know, what I would do differently is I just would never have mentioned it to Warren, and just made my own investment and left it alone," Sokol told CNBC's Squawk Box. "I think that's a disservice to Berkshire, but if that's what people want to do in the future, that's fine. You can't -- or at least I don't think you can [tell] executives to not invest their own family's capital in a company that Berkshire had no interest, or even knowledge of, and somehow police that. The only thing you can do is just say [that] if you invest your own money, don't ever mention it to anyone at Berkshire. That doesn't make sense to me either, but that's certainly what it sounds like."
MidAmerican Energy Holdings includes MidAmerican Energy Co., Kern River Gas Transmission Co., Northern Natural Gas, PacifiCorp, CE Electric UK and CalEnergy Generation. According to Buffett, before he overcame his skepticism and embraced the Lubrizol deal, he was leaning toward a major acquisition by MidAmerican.
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.