Warren Buffett Announces Retirement: A Farewell Letter and $1.35 Billion Donation

Warren Buffett is stepping down as CEO of Berkshire Hathaway. The 95-year-old investing legend made the announcement in his final shareholder letter. His successor, Greg Abel, will take over at year’s end. This marks the end of an era for the conglomerate.

The news follows Buffett’s recent conversion of $1.35 billion in Berkshire shares. He donated these shares to several family foundations. This move accelerates his lifetime giving plan.

A Candid Farewell From the Oracle of Omaha

Buffett’s final letter was remarkably personal. He acknowledged the inevitability of aging with characteristic wit. “Father Time remains undefeated,” he wrote, according to Reuters.

He reflected on his own physical limitations but noted his continued presence in the office. The letter served as both a goodbye and a cautionary tale. He urged corporate boards to remain vigilant about CEO cognitive decline.

The Succession Plan Finally Activates

Greg Abel has been the designated successor for years. He currently serves as vice chairman for non-insurance operations. Buffett expressed full confidence in Abel’s abilities in the letter.

The transition comes as Berkshire’s stock has underperformed recently. Shares are down about 5% over the past six months. This contrasts with the S&P 500’s 20% gain during the same period.

Massive Share Donation Accelerates Philanthropy

Buffett converted 1,800 Berkshire A shares into 2.7 million B shares. The total value was approximately $1.35 billion. These shares were distributed to four family foundations.

The donation includes the Susan Thompson Buffett Foundation. It also benefits the Sherwood Foundation. This accelerates Buffett’s long-standing pledge to give away his fortune.

His personal fortune remains largely in Berkshire stock. It is currently valued at around $149 billion. He plans to continue his philanthropic work in retirement.

Final Warnings on Corporate Governance

Buffett used his platform to critique executive compensation trends. He argued that increased transparency has backfired. Proxy statements have ballooned to over 100 pages, he noted.

He believes disclosure lets CEOs benchmark pay against peers. This creates upward pressure on all compensation packages. The system often fails shareholders, he suggested.

His advice to directors was simple: stay alert and speak up. He emphasized the importance of integrity in boardrooms. This was a recurring theme in his final message.

Warren Buffett’s retirement closes a monumental chapter in finance. His final letter blends personal reflection with sharp corporate critique. The investing world now watches as his successor takes the helm.

Thought you’d like to know

Who is replacing Warren Buffett as CEO?

Greg Abel is taking over as CEO. He currently serves as Vice Chairman of Berkshire’s non-insurance operations. Abel has been the designated successor since 2021.

How much did Buffett donate in his recent gift?

He donated approximately $1.35 billion in Berkshire shares. The gift involved converting A shares to B shares. It was distributed to four family foundations.

What was the main message of Buffett’s final letter?

He emphasized the importance of succession planning and corporate vigilance. He also acknowledged his own physical limitations. The letter blended personal reflection with business advice.

How has Berkshire stock performed recently?

The stock has underperformed the broader market. It is down about 5% over the past six months. This compares to a 20% gain for the S&P 500.

Will Buffett remain involved with Berkshire?

He will step back from day-to-day operations. He plans to continue his philanthropic work. He may still deliver his annual Thanksgiving message.