Buffett outlines succession plan in letter to investors

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The Independent Online

Warren Buffett, the motorbike-riding octogenarian, billionaire investor nicknamed "The Sage of Omaha", has outlined a succession strategy for his $143.6bn-revenue business empire.

In a letter to shareholders accompanying the annual report this weekend, Mr Buffett, pictured, said he was "enthusiastic" about his successor at Berkshire Hathaway, a vast Nebraska-based conglomerate that spans insurance, retail and building products companies. This is the first time the company has confirmed that anyone has been lined up to replace Mr Buffett.

Although he did not name his successor, the 82-year-old said the individual was well-known to the board and had strong "managerial and human qualities". Mr Buffett added that there were two back-up candidates, but that he is in "excellent health" so investors should not expect him to go anywhere soon.

The succession issue became a major Berkshire talking point after David Sokol, one of Mr Buffett's top lieutenants and considered by many to be the heir apparent, resigned over a questionable share purchase.

More controversially, Mr Buffett, towards the end of the 105-page report, suggested that a relative should take a leading role in the event of his being unable to run the business. "I believe it would be wise when I am no longer CEO to have a member of the Buffett family serve as the non-paid, non-executive chairman of the board," he said.

Mr Buffett admitted he was "dead wrong" in predicting, in last year's letter, that a housing recovery was imminent. But, he insisted, "housing will come back – you can be sure".

Berkshire's net income fell from $4.4bn in the last three months of 2010 to barely $3bn in the final quarter last year. Full-year revenue was up $7.5bn on 2010's $136.2bn.