Berkshire Hathaway Reshapes Leadership as Todd Combs Exits for JPMorgan

Less than three weeks before Warren Buffett hands the chief executive role at Berkshire Hathaway to Vice Chair Greg Abel, the conglomerate is implementing a series of management changes that signal a departure from its long-standing decentralized approach.

Combs Leaves for JPMorgan Assignment

Portfolio manager and GEICO chief executive Todd Combs, 54, will leave Berkshire in January to run a $10 billion “Strategic Investment Group” at JPMorgan Chase. The unit forms part of the bank’s new $1.5 trillion “Security and Resiliency Initiative,” aimed at supporting growth, innovation and manufacturing primarily in the United States. Combs, a JPMorgan director since 2016, will resign from the board when he assumes the post. In Berkshire’s statement, Buffett said the bank “made a good decision,” while JPMorgan Chair and CEO Jamie Dimon called Combs “one of the greatest investors and leaders” he has known.

Combs joined Berkshire in 2010 to help oversee the firm’s public-equity portfolio and added the top job at auto insurer GEICO in 2020. At Berkshire’s annual meeting in May, Insurance Vice Chair Ajit Jain credited Combs with improving GEICO’s pricing accuracy and expanding the use of telematics, though Jain noted further technology upgrades were still required. GEICO’s chief operating officer Nancy Pierce, an employee since 1986, is being promoted to CEO and will now steer the insurer’s digital initiatives.

Unsettled Portfolio Oversight

Combs’ exit leaves questions about who will manage the share-investment portfolio beyond Buffett and fellow manager Ted Weschler. Buffett has said Abel will assume overall responsibility for capital allocation, but Berkshire did not specify whether Weschler’s duties will expand or if additional managers will be recruited. In an email to CNBC’s Buffett Watch, Hudson Value Partners’ Christopher Davis urged the company to clarify roles within the investment team, arguing that a trillion-dollar enterprise undergoing its first leadership transition should offer greater transparency.

Adding Management Layers

The latest moves reflect a gradual shift away from the loose operating style often described as “the Berkshire way.” Abel, already supervising the non-insurance subsidiaries more actively than Buffett historically did, is creating new oversight positions:

• Adam Johnson, chairman and CEO of fractional-jet operator NetJets, becomes President of Consumer Products, Service and Retailing, a newly established post that will oversee 32 Berkshire units in those categories.
• Subsidiaries including BNSF Railway, Berkshire Hathaway Energy and truck-stop operator Pilot will continue to report directly to Abel.

Some governance experts note the additional layer mirrors structures at many large corporations. For comparison, U.S. Securities and Exchange Commission filings show that peers of similar size typically maintain dedicated group presidents across business lines.

First-Ever General Counsel

In another break with tradition, Berkshire is appointing its first in-house general counsel. Michael O’Sullivan, who has held the same title at Snap Inc. since 2017 and previously practiced at Munger, Tolles & Olson, will move to Omaha headquarters next year. Until now, Berkshire relied exclusively on outside law firms for legal matters.

Imagem: Internet

CFO Succession Planned

Long-time Chief Financial Officer Marc Hamburg will retire in June after four decades at the company. Buffett called Hamburg “indispensable” in Monday’s announcement. His successor will be Charles Chang, currently CFO at Berkshire Hathaway Energy.

Market Reaction

Berkshire’s Class A and Class B shares each fell nearly 1 percent in the week following the announcements. The stock is still more than 7 percent below the intraday highs recorded in May, shortly before Buffett said he would relinquish the CEO title at year-end. Earlier this year, Keefe, Bruyette & Woods downgraded the shares to “underperform,” citing uncertainty surrounding the leadership transition.

Despite the organizational overhaul, Buffett will remain board chair and is expected to stay involved in major capital-allocation decisions. Investors now await further details on how Abel, Johnson, O’Sullivan and Chang will coordinate as Berkshire evolves from a structure built around its iconic founder to one designed for its next era.

Crédito da imagem: Brian Losness / Reuters