Berkshire Hathaway Resumes Share Buybacks, CEO Greg Abel Invests $15 Million of Salary

Berkshire Hathaway, the conglomerate led by legendary investor Warren Buffett and now helmed by new CEO Greg Abel, announced on Thursday the resumption of its share repurchase program, marking the first buybacks since the second quarter of 2024. Concurrently, CEO Greg Abel revealed his personal investment of $15 million in Berkshire Hathaway stock, an amount equivalent to his after-tax annual salary. Abel stated his intention to continue investing his entire salary into Berkshire shares each year.

The Omaha, Nebraska-based company disclosed in a regulatory filing that it commenced repurchasing its Class A and Class B shares on Wednesday. Berkshire’s established policy permits share buybacks when the chief executive, in consultation with the chairman of the board, Warren Buffett, deems the repurchase price to be below the company’s intrinsic value, as outlined in its recently released annual report.

Speaking to CNBC’s "Squawk Box" on Thursday, Abel confirmed his discussions with Buffett regarding the buyback initiative. "I absolutely talked to Warren," Abel stated. "So how I approached it was, obviously looking at the value, having a view of intrinsic value [and then] consulted with Warren relative to the value and the timing."

Abel explained that the company typically does not disclose the commencement of share repurchases. However, he felt it was important to communicate this action to shareholders, particularly in light of the leadership transition. "We felt it was important to communicate to our shareholders, our partners, our owners, with the transition of leadership," he said.

Berkshire Hathaway’s B shares have experienced a 3% decline year-to-date and are down 10% from their peak in May of the previous year. The stock faced pressure earlier in the week following the company’s report of a nearly 30% decrease in operating earnings for the fourth quarter, largely attributed to a downturn in its insurance operations. The last time Berkshire engaged in share repurchases was in the second quarter of 2024, a period during which some investors had been urging the company to deploy its substantial $373.3 billion cash reserve. Following the announcement of the buyback program, Berkshire B shares saw a 1% increase in early trading on Thursday.

Abel’s Personal Investment Signals Commitment

In a separate filing, Greg Abel disclosed his personal acquisition of $15 million worth of Berkshire Hathaway stock. This transaction significantly enhances his personal stake in the conglomerate, addressing potential concerns from some investors regarding whether Buffett’s successor possesses comparable "skin in the game." Warren Buffett, who owns approximately 37.5% of Berkshire’s Class A shares, has indicated no intention to sell his stake, other than for charitable contributions. He has previously stated that Berkshire Hathaway represents about 99.5% of his net worth.

"Absolute alignment with our shareholders, our partners, our owners, is critical," Abel told CNBC. "I already have some shares, but the goal was to continue to demonstrate alignment with them. … As the CEO, I absolutely, obviously, believe in Berkshire, with the transition from Warren, and I inherited a company that has an incredible foundation."

Prior to this recent purchase, Abel, a long-serving executive at Berkshire who previously managed the company’s non-insurance divisions, held Berkshire stock valued at $164.4 million, according to FactSet data. The CEO expressed his commitment to reinvesting his entire after-tax salary into Berkshire shares annually for the duration of his leadership, which he hopes will extend for "20 years."

Since assuming leadership, Abel has consistently emphasized continuity with Buffett’s established investment philosophy. In his inaugural annual shareholder letter, released over the weekend, he sought to reassure investors that Berkshire Hathaway’s core culture of financial prudence and disciplined investing would be maintained "into perpetuity." While some investors found comfort in Abel’s commitment to Buffett’s principles, others expressed a desire for more decisive strategic moves from the new CEO early in his tenure. Wednesday’s announcements regarding share buybacks and his personal investment are expected to address some of these investor sentiments.

When asked by CNBC’s Becky Quick about the reactions of Buffett and the board to his salary reinvestment plan, Abel reported, "Both were obviously very supportive." He added that their response was, "This is so Berkshire." This statement underscores the alignment of Abel’s actions with the deeply ingrained corporate culture and values championed by Warren Buffett.