When Warren Buffett opens his mouth, entrepreneurs listen. Every action he makes is watched like a hawk by business leaders across the world, keen to extract any sort of lesson or piece of wisdom – but it’s not every day that you see him fire someone.
Yet it appears that may have happened. According to Reuters, Berkshire Hathaway has replaced Benjamin Moore chief executive Denis Abrams with an outside executive, Bob Merritt.
But the New York Post reports something else is afoot – Abrams and other executives took themselves on a trip to Bermuda, where they enjoyed themselves on a nice yacht, all at the company’s expense. The move was to celebrate a rise in company sales for the first time in five years.
But the party was short-lived. The NYP reports that Abrams was told to clear out his desk; all while being watched by Berkshire officials.
Benjamin Moore, founded in 1883, was bought by Berkshire Hathaway back in 2000 for $US1 billion when the company had its eye on the property market. At the time, it was hoped the acquisition would support Berkshire’s move into housing.
Since the housing industry tanked, the company has suffered – and some say Abrams has exacerbated the problem by introducing new, higher-priced products.
The business hasn’t even rated a mention in many of Berkshire Hathaway’s annual updates, and is often lumped together with some other poor-performing businesses in the housing sector.
But this isn’t even the first CEO-related controversy Berkshire Hathaway has suffered in the past year. Last year, David Sokol left the company after a trading scandal during which it was found he had acquired shares in a company he was convincing Buffett to buy.
At the time, Berkshire Hathaway didn’t say there was any wrongdoing – just that Sokol would be leaving to pursue philanthropic interests and create a company which would “provide opportunity for my descendants”.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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