Buffett Says the Meek Shall Inherit the Earth. But Will They Stay Meek?

If you haven't had a C-suite or Board role, you might be surprised how hard it is for businesses to choose the next CEO, that is to plan for succession.

The Bible says the meek shall inherit the Earth. The question is, will they stay meek?
— Warren Buffett

As investors, we spend so much time thinking about earnings and balance sheets, yet often overlook the people at the top of those reports. Who runs the company? What drives them? And what happens when power changes hands?

Buffett's quote alludes to the fact that even the most disciplined, responsible managers can change when the throne becomes theirs. The CEO who once seemed honest might start playing with the numbers to protect their job above all else.

Buffett's solution at Berkshire Hathaway? His son, Howard, will serve as non-executive chairman after Warren himself leaves the scene. Not as a co-CEO or as an insider, but as someone who "gets paid nothing" (in Warren's words) and holds the position precisely to keep the CEO in check.

It’s a kind of backstop. Not because they expect failure, but because failure is always possible. And because it’s much harder to remove a CEO who also chairs the Board. That role lets them control meeting agendas and shape the narrative.

As an investor, the lesson that I take away from the fact that Berkshire Hathaway has focused significant attention on the issue of succession is this. Look for companies where the management acts in the interests of shareholders rather than themselves.

That means they prioritize sustainable, long-term value creation for all shareholders, rather than pursuing short-term gains that may result in a higher annual bonus for the CEO.

I'll leave you with one final thought on this theme, from Tom Gayner. Gayner is CEO of Markel Group, which is often called the "mini-Berkshire Hathaway," and a successful investor. Here's what he has to say about management:

It’s a personal quirk of mine that when the CEO shows up on magazine covers as a celebrity, I’m automatically hesitant to invest in the stock.
– Tom Gayner

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If you're looking for an enjoyable, accessible, and fascinating book about Warren Buffett, check out The Warren Buffett Way by Robert G. Hagstrom. The latest, 30th, edition comes with forewords by three investment greats: Peter Lynch, Bill Miller, and Howard Marks.

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