Last week came news that David Sokol, the ex-CEO of Berkshire Hathaway subsidiaries NetJets and MidAmerican Energy Holdings Company, resigned after revealing that he’d traded shares in a company recently purchased by Berkshire Hathaway. Mr. Sokol first purchased 2,300 shares of Lubrizol the day after a meeting with Citigroup bankers in December 2010, where they presented various companies as potential takeover targets for Berkshire Hathaway (upon his apparent request). He soon thereafter sold those shares, but then purchased 96,060 shares of Lubrizol for approximately $10 million in early January. Approximately one week later Mr. Sokol pitched the idea of acquiring the company to his boss, Warren Buffett, who on March 14, 2011 announced an agreement to purchase Lubrizol for $9.7 billion.
Whether David Sokol’s actions were illegal or not remains to be seen. But the big question on my mind is: WHAT ON EARTH WAS HE THINKING?... I mean, this is a man who by all accounts was on a very short list of possible successors to take over the CEO throne at Berkshire Hathaway (the operations portion of the business at least). He was head of not one, but TWO major Berkshire subsidiaries! And judging from Warren’s own words in his annual shareholder letters, Mr. Sokol seemed to have the full trust and faith of his boss... I just don’t understand why he would throw away the opportunity to manage one of the greatest companies on earth, certainly amongst the most prestigious, for a payday that can only pale in comparison to what might have been?? Maybe I’m just being naive, but I just don’t get it...
Whether David Sokol’s actions were illegal or not remains to be seen. But the big question on my mind is: WHAT ON EARTH WAS HE THINKING?... I mean, this is a man who by all accounts was on a very short list of possible successors to take over the CEO throne at Berkshire Hathaway (the operations portion of the business at least). He was head of not one, but TWO major Berkshire subsidiaries! And judging from Warren’s own words in his annual shareholder letters, Mr. Sokol seemed to have the full trust and faith of his boss... I just don’t understand why he would throw away the opportunity to manage one of the greatest companies on earth, certainly amongst the most prestigious, for a payday that can only pale in comparison to what might have been?? Maybe I’m just being naive, but I just don’t get it...
That is the trap of those "A" type personalities. That is the only explanation. I mean the guy has so much money he could have taken time off and afforded to do anything so there could really be no motive. Amazing.
ReplyDelete'Anonymous', your explanation does make sense. Guess being an "A" type doesn't necessarily mean you make sound decisions.
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