Posted on 30 Mar 2011
Widely considered to be Warren Buffett's successor at Berkshire Hathaway, investors are stunned to learn about the sudden resignation of David Sokol.
One of "The Oracle of Omaha's" favored lieutenants, Sokol resigned after buying shares in chemical company Lubrizol Corp., which he then encouraged Buffett to acquire.
Sokol's resignation from his roles as chairman of MidAmerican Energy and NetJets is a stunning turn of events for Buffett, who recently sealed a $9 billion deal for Lubrizol.
Buffett, in a statement today, said that Sokol had told him he owned shares in Lubrizol Corp. when they first discussed the deal in January. Buffett said, "neither Dave nor I feel his Lubrizol purchases were in any way unlawful" and weren't a factor in his decision to resign.
Instead, Buffett said Sokol wrote in a letter of resignation on March 28 that he wanted 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 descendents and funding for my philanthropic interests."
Buffett said he was originally not in favor of the idea but warmed to it after Sokol told him of a conversation with Lubrizol's chief executive officer. He did not elaborate on the details of that conversation. Buffett said he did not feel Sokol's purchases were unlawful.
"Especially in a situation like this, the brand is everything," said William Larkin, fixed income portfolio manager at Cabot Money Management. "Often, when you violate that brand for any reason whatsoever, your goose is cooked."
Buffett has regularly praised Sokol's work, and many investors have speculated that Sokol was on the short list to succeed Buffett at the Omaha, Neb.-based company.
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.