Warren Buffett’s Thanksgiving Letter Is Out. What He Said About Donations and His Successor.

Berkshire Hathaway’s Warren Buffett is stepping away from the CEO role at the end of the year. (Bill Pugliano/Getty Images)

Key Points

• Warren Buffett plans to accelerate gifts to his three children’s philanthropies to ensure they can dispose of his estate during their lifetimes.
• Buffett, 95, reiterated strong support for his successor, Greg Abel, who will become CEO of Berkshire Hathaway at year-end.
• Buffett stated that Abel has exceeded expectations and understands many Berkshire businesses and personnel better than he does.

Warren Buffett said he would step up the pace of gifts to his three children’s philanthropies so that they stand a better chance of disposing of his estate while they are alive and able to complete the task.

In a Thanksgiving letter posted on the Berkshire Hathaway website, Berkshire CEO Buffett, 95, also reiterated strong support for his successor, Berkshire executive Greg Abel, who will become CEO at year-end with Buffett remaining chairman.

“Greg Abel has more than met the high expectations I had for him when I first thought he should be Berkshire’s next CEO. He understands many of our businesses and personnel far better than I now do, and he is a very fast learner about matters many CEOs don’t even consider. I can’t think of a CEO, a management consultant, an academic, a member of government—you name it—that I would select over Greg to handle your savings and mine.”

Buffett wrote that while he plans to increase the gifts to his three children’s foundations, he does plan to keep “a significant amount” of Berkshire stock.

He wants to maintain iron-clad control of the company while Abel establishes himself as CEO. He wrote that he would keep a big stake until Berkshire shareholders “develop the comfort” in the 63-year-old Abel that he and former Berkshire vice chairman Charlie Munger “long enjoyed.” Buffett sees Abel remaining Berkshire CEO for an extended period, way past the conventional retirement age of 65.

Buffett’s move to keep a sizable amount of Berkshire stock will insulate the company from outside pressure when he is no longer CEO. One of Buffett’s fears is that activist investors could take aim at Berkshire and try to force a breakup of the sprawling conglomerate—something he opposes.

Buffett didn’t specify how quickly he will boost the pace of giving to the four Buffett foundations that are overseen by his three children: Susan, Howard, and Peter. They are now aged 72, 70, and 67, respectively.

Buffett now owns about 197,000 Class A shares (worth about $147 billion), or just under 14% of the total shares outstanding, with Class B stock converted into an equivalent amount of A shares, Barron’s estimates.

His voting control is closer to 30% because the A shares are supervoting stock. He has been giving away about 5% of his Berkshire holdings annually, with his Berkshire stock accounting for about 99% of his net worth.

Buffett wrote that he would convert 1,800 Berkshire Class A shares, now worth about $1.35 billion, into 2.7 million B shares on Monday and give them to the four family foundations.

Buffett makes his major donations to the four family foundations and the Gates foundation in June and supplements those donations with gifts to the family foundations around Thanksgiving.

The Gates Foundation, headed by Bill Gates, now gets the bulk of Buffett’s annual giving but won’t receive any stock after Buffett’s death.

The four Buffett family foundations that received gifts Monday are led by the Susan Thompson Buffett Foundation (named for Buffett’s late wife Susie and chaired by his daughter Susan). It got 1.5 million B shares. Buffett also gifted 400,000 B shares each to the Sherwood Foundation (run by Susan), the Howard G. Buffett Foundation, and NoVo Foundation (Peter).

The Sherwood Foundation is focused on giving in Nebraska, while the Howard Buffett Foundation is a major benefactor of Ukraine, and the NoVo Foundation has focused its giving in the area around Kingston, N.Y.

Buffett praised his three kids and the way they have handled his increasing annual gifts that now total about $500 million each a year to their individual foundations.

“All three children now have the maturity, brains, energy and instincts to disburse a large fortune,” he wrote.

This year’s Thanksgiving donation to the four family foundations is up from 2.4 million A shares in each of the past two years.

The Buffett children will have a huge job in disposing of their father’s estate through giving after his death. The estate consists almost entirely of Berkshire stock. Buffett has said he would like to see the stock donated over a decade or more. That ambitious target could involve annual giving of over $10 billion annually, more than the Gates Foundation gives away each year. The Gate Foundation donated $8 billion last year, more than any other U.S. foundation.

Berkshire’s Class A shares are little changed on Monday at $748,200.

Write to Andrew Bary at andrew.bary@barrons.com