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Buffett's Main Guy Resigns, Defends Stock Purchase

Source: CNBC, WSJ

Posted on 31 Mar 2011

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Widely considered to be Warren Buffett's successor at Berkshire Hathaway, investors were stunned to learn on Wednesday about the sudden resignation of David Sokol, chairman of MidAmerican Energy and NetJets. Sokol resigned after buying shares in chemical company Lubrizol Corp., which he then encouraged Buffett to acquire.

In an interview this morning on CNBC, he defended his stock purchases, saying, "I don't believe I did anything wrong. "I don't think you can ask executives not to invest their own families' capital." During the interview, he also said he had no special insider knowledge, and never does. He didn't think Buffett would actually be interested in buying Lubrizol, and had no role at all in Berkshire's decision-making process on acquisitions and investments. If he had been involved in actually making the decision, Sokol says he would not have bought the shares.

He said his decision to resign now was driven more by the timing of the Berkshire annual meeting and the completion of the Lubrizol deal announcement.

Buffett said Sokol, 54 years old, had bought 96,060 shares in January, before Berkshire reached a $9 billion deal to acquire the company. Berkshire's purchase price of $135 per share meant that Mr. Sokol's stake rose $3 million in value.

Buffett said he and Sokol didn't feel the Lubrizol purchases were "in any way unlawful."

Due to Sokol's departure, Buffett said Greg Abel, current president and CEO of MidAmerican Holding, will become its chairman; Todd Raba, president and CEO of Johns Manville, will become its chairman; and Jordan Hansell, President of NetJets, will become that unit's chairman and CEO.