Berkshire Hathaway's historic annual meeting in May 2024

Company News

by Glenn Dyer

Berkshire Hathaway's annual meeting is scheduled for May 4 in Omaha, Nebraska, and it promises to be a historic event due to the absence of Charlie Munger, the company's long-time vice chair and friend of Warren Buffett. This year, Buffett will take the stage alone.

The timing of the meeting was disclosed earlier this month to allow shareholders and Buffett enthusiasts ample time to plan their travel and accommodations, as the company is set to report its fourth-quarter and 2023 figures soon.

Speculation abounds among US analysts that Buffett may formally announce his successor, Greg Abel, as Vice Chairman during the meeting. Abel was designated as the successor in 2021 but had not been officially named. Charlie Munger's passing last year created a vacancy that Abel is now expected to fill.

Buffett's succession plan involves dividing the CEO's role into three distinct positions, each overseeing specific aspects of the business. This strategic move aims to ensure a smooth leadership transition within the conglomerate.

Ajit Jain will continue to oversee Berkshire Hathaway's extensive portfolio of insurance businesses and serve as the primary source of new capital for the company's substantial investment portfolio. While Jain is considered a potential successor, Abel remains the favored candidate.

The significance of the upcoming meeting may have influenced Berkshire Hathaway and the Haslam family of Tennessee to resolve their legal dispute last week. The dispute pertained to the $11 billion sale of an 80% stake in Pilot Travel Centers, the largest truck stop and service center operator in North America, to Berkshire Hathaway.

The court action was abruptly withdrawn just hours before a two-day trial scheduled for January 8 and 9, 2024. No details of the settlement were released, leaving questions about whether a winner emerged or if the two parties reached an amicable agreement.

The dispute centered on Berkshire's accounting for the value of Pilot Travel Centers following a second purchase deal a year ago that increased its stake to 80%. The Haslam family alleged that Berkshire's accounting methods would reduce the price it would pay to acquire the remaining 20% stake in PTC. In response, Berkshire accused Jimmy Haslam of making payments to Pilot executives to inflate the company's value.

The Haslam family holds an option that can be exercised annually in January to compel Berkshire to purchase the remaining shares, and they argued that Berkshire's new accounting methods would depress the option's price.

Greg Abel was expected to testify in the case, and some speculate that Berkshire's reluctance to face a public courtroom battle may have played a role in the settlement. The ultimate winner of the dispute may be determined by the price at which the 20% put option is exercised; a lower price would suggest Berkshire prevailed, while a higher price would favor the Haslams.

This dispute is a rare example of a public disagreement involving Buffett and Berkshire Hathaway. While several court cases involving Berkshire's energy arm and liability for wildfires in the US western states are being settled, they have attracted less attention.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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