Berkshire Hathaway Insight from Susan Decker

According to information from the former CFO of Yahoo and the current director of Berkshire Hathaway, Susan Decker is a lot less contentious and analytical and more collegial and conceptual. She spoke on a panel discussion at Stanford University on Monday talking about Berkshire Hathaway. She contrasts the other boards that she worked on with the Berkshire Hathaway board.

She also noted that many boards do not get involved with strategy in early discussions about acquisitions, but jump in later on during the process in order to analyze and approve the deals. Berkshire Hathaway directors, on the other hand, are involved early in several conversations, and they are asked about structuring a deal even before they know the name of the particular target.

Decker Statements

“The {Berkshire] board is not involved in the valuation decision for acquisitions. Warren will often discuss large deals with the board in advance, but usually at the conceptual level, rather than asking for approval of valuation and structuring,” said Decker. “It’s the opposite with other boards I’m on, in which approval is required by the board for the funds used for large acquisitions and for structuring considerations of the deal.”

Decker also took it upon herself to explain that the synergy between the various pieces of Berkshire Hathaway is why the company has such strong returns. “The magic of the returns has been in this collection of businesses, some of which generate more cash than they likely need, and others of which have attractive investment opportunities for that capital, like Burlington Northern and a few others. Berkshire Hathaway can transfer excess capital from businesses that don’t need it to businesses that do need it, tax-free and in a way that enhances compound annual growth rates.”

Board Meetings and the Discussion of Succession

When it came to the future of Berkshire Hathaway and who would succeed Warren Buffett, Decker was coy in her responses except that she said succession was talked about at each meeting of the board. She also mentioned that she is confident that the operating model at Berkshire Hathaway will continue to thrive even without Charlie Munger and Warren Buffett at the helm.

It’s also important to note that Warren Buffett’s annual pay has stayed unchanged at $100,000 for many decades.

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