Over the past several years, Berkshire Hathaway's (NYSE:BRK-A) (NYSE:BRK-B) succession plan for when Warren Buffett can no longer run the company has become of greater interest to investors. We recently got some more concrete information about the succession plan when Berkshire managers Ajit Jain and Greg Abel both joined the company's board and were named vice chairmen, a move Buffett confirmed was part of the company's succession plan.

So, who are these two men who could take Warren Buffett's place? Here's what we know about Berkshire's succession plan, and a brief introduction to the two Berkshire managers who could potentially run the $600 billion conglomerate in the future.

Warren Buffett speaking to reporters.

Image Source: The Motley Fool.

Berkshire's succession plan

Warren Buffett is 87 years old, and his business partner and right-hand man, Charlie Munger, is 94. While we all hope Buffett and Munger live well into their 100s, the reality is that they won't be able and/or willing to run the company forever. So over the past few years, Berkshire's succession plan has become much more of a hot topic.

The most extensive discussion of Buffett's thoughts on the matter can be found in his 2014 letter to Berkshire Hathaway shareholders. The letter represented 50 years at the helm for Buffett, and it shouldn't come as a surprise that much of the "next 50 years" discussion included Berkshire's post-Buffett future.

The first part of the plan is that Buffett's son, Howard, will most likely succeed Buffett as a non-executive chairman. This is to create a system of checks and balances, as it is significantly easier to remove an underperforming or otherwise poorly matched CEO if that person is also the chairman.

Going further into the discussion, Buffett discussed some qualities that Berkshire's next CEO should possess. Just to name a few of the key attributes:

  • The CEO must be a "rational, calm, and decisive individual who has a broad understanding of business and good insights into human behavior."
  • The CEO must "know his limits."
  • Berkshire's CEO must be "all in" for the company, not for himself. (Note: Buffett acknowledges that he uses male pronouns in these statements but says that gender will have no bearing on the CEO search.)
  • The CEO must be motivated by the company's success, not by money.
  • The CEO must be able to "fight off the ABCs of business decay, which are arrogance, bureaucracy, and complacency."
  • The CEO should come from internal candidates. Buffett wants the next CEO to already know the company well.
  • The CEO should be relatively young, and "not likely to retire at 65." Buffett defines this as someone who should last for more than 10 years at the helm.

Who is Ajit Jain?

Ajit Jain is 66 years old and has been working with Berkshire for 31 years. He is Berkshire's newly appointed vice chairman of insurance operations. Until recently, Jain was president of Berkshire Hathaway Reinsurance Group and also led several of Berkshire's insurance companies.

Buffett has spoken very highly of Jain throughout the years, and at one point he even told Berkshire's employees that they could "swap me for him." In his most recent annual letter, Buffett said:

Ajit has created tens of billions of value for Berkshire shareholders. If there were ever to be another Ajit and you could swap me for him, don't hesitate. Make the trade!

On another occasion, Buffett said that "If Munger, I, and Ajit are ever in a sinking boat and you can only save one of us, swim to Ajit." To put it mildly, Buffett feels that Jain has been, and will continue to be, a tremendous asset to Berkshire and its shareholders.

Who is Greg Abel?

Greg Abel is 55 years old, has been with Berkshire for 25 years, and has been in charge of Berkshire Hathaway Energy. Whereas Jain was named vice chairman of insurance operations, Abel is now vice chairman of non-insurance business operations. In other words, Jain is in charge of insurance, and Abel is in charge of all of the other subsidiaries.

Buffett has also been eager to praise Abel over the years, calling him a "dealmaker" and speaking highly of his management skills. "I always make time for Greg when he calls, because he brings me great ideas and is truly innovative in his thinking and business approach," Buffett said in 2013.

Why two potential successors?

Buffett has run Berkshire Hathaway for more than 50 years and wants a successor who will be at the helm of Berkshire for a long time. In other words, he doesn't necessarily want a CEO who's going to retire in a few years.

While there are probably several factors that Berkshire's board will take into account when the time comes to name a successor, the age and potential longevity of the next CEO will certainly be one of the main deciding factors. There has been widespread speculation that Jain would take the reins of Berkshire if it were necessary now.

In his 2014 letter to shareholders, Buffett wrote, "Both the board and I believe we now have the right person to succeed me as CEO -- a successor ready to assume the job the day after I die or step down." Many believe Buffett was directly referring to Jain in this statement.

However, Jain is 66 years old. If Buffett remains in charge for another five years, Jain would be in his 70s, and the board may be more likely to appoint Abel, who will just be turning 60. In a nutshell, since nobody knows if Buffett will continue to lead Berkshire for one more week or 10 more years, this move gives the board some flexibility.

Matthew Frankel owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.