I admit it. I'm kind of nerdy. My wife says that I read too much. My first stop at Berkshire Hathaway's (NYSE: BRK-A) annual meeting was the bookstore. I asked which books were new this year, and the store's employee suggested Pleased But Not Satisfied by Dave Sokol.

"A lot of folks here think he will be the next CEO after Warren Buffett," said the clerk. How could I resist that recommendation? I couldn't.

Whoever replaces the Oracle of Omaha will have huge shoes to fill. Berkshire has more than 70 operating businesses (GEICO, See's Candies, etc.), ranks 11th on the 2008 Fortune 500 List, and is valued at around $200 billion. Moreover, Berkshire exerts influence through its ownership in many publicly traded companies including:

Company Name

Percentage of Company Owned (12/31/07)

American Express (NYSE: AXP)


Coca-Cola (NYSE: KO)


Moody's (NYSE: MCO)


Washington Post (NYSE: WPO)


Wells Fargo (NYSE: WFC)


Burlington Northern Santa Fe (NYSE: BNI)


Talk about a tough act to follow. Over the past 43 years, Buffett grew Berkshire at a rate of 21.1% compounded annually. During that time he became one of the most influential and revered businessmen anywhere. He owned such a large portion of Berkshire shares that his role as CEO could never be challenged, even if he did very unfashionable things, such as not purchasing Internet stocks in the roaring late 1990s.

But why would Sokol be a logical candidate? Here is my speculation from reading Pleased But Not Satisfied as well as Buffett's writings.

In Berkshire's 2007 annual report, Buffett wrote: "We have for some time been well-prepared for CEO succession because we have three outstanding internal candidates. The board knows exactly whom it would pick if I were to become unavailable, either because of death or diminishing abilities."

So we need only look at Berkshire managers, not outside candidates. Let's focus on why Dave Sokol might be the favorite. Sokol, an Omaha native and graduate of the University of Nebraska at Omaha, has been CEO of large companies for quite some time. In his book, he says, "By 1989, only six years after a standing start, Ogden Projects Inc. had become a billion-dollar corporation with a very bright future. ... Here I was, 32 years old and CEO of a New York Stock Exchange company."

He subsequently received a call from Berkshire director and Buffett friend Walter Scott Jr., which led to Sokol becoming CEO of the company that evolved into MidAmerican Energy Holdings. In 1999, Berkshire purchased its initial stake in MidAmerican, with earnings per share at $2.59. In 2007, aided in part by the 2002 purchase of PacifiCorp, MidAmerican's EPS had grown to $15.78. Arguably, MidAmerican is Berkshire's most complicated and most important noninsurance business.

At the Berkshire meeting, Sokol was the only executive Buffett asked to speak; he answered questions about the Klamath River Dam. The Klamath tribes and fishermen have had their way of life disrupted by PacifiCorp's hydroelectric dams. Sokol did a good job summarizing the complexities of the issues, stating that, as a public utility, PacifiCorp would follow the Federal Energy Regulatory Commission's decision about whether to remove the dams.

For years, Sokol has taught management and leadership to executives, and his small tome was written to help with training and succession planning. In slightly more than 100 pages of plain-spoken English filled with examples, he discusses major events of his personal life, his core business principles, and strategies for businesses and individuals. His book is easy to read and contains lots of practical knowledge.

The title, Pleased But Not Satisfied, is a tribute to the late Peter Kiewit, previously Omaha's wealthiest and most prominent citizen. (Berkshire Hathaway's offices are located in Kiewit Plaza.) Sokol describes the title as "much more than a title. In reality, it is a state of mind, a recognition that the job of running a business is a journey never finished." 

Perhaps presciently, Berkshire's current CEO writes in the book's foreword: "But I have a small confession to make: by the standards of personal behavior and his value to Berkshire Hathaway, I am more than pleased and fully satisfied by all the experiences I have had with Dave."

I should add that the 77-year-old Buffett looked spry and was incredibly sharp answering scores of questions for more than six hours at the annual meeting. With the world being a better place having Buffett around, we can hope that he will run Berkshire at least as long as Rose Blumkin, the founder of Berkshire subsidiary Nebraska Furniture Mart, ran her company. She worked well past her 100th birthday.

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