It looks like Warren just threw Dave under the bus. He likely should have done so right from the start given how ridiculous Sokol's actions were. I thought it might be interesting to have another look at what Sokol had to say right after the story broke.
BECKY QUICK: Let's get to the man involved in our top story this morning, David Sokol, who is the man who was widely regarded as the leading candidate to succeed Warren Buffett at Berkshire Hathaway. He tendered his resignation earlier this week and he joins us right now on set to explain some of the events leading up to his resignation. And David, thank you very much for coming in today.
DAVID SOKOL: Glad, to be here Becky.
BECKY: Well, we're thrilled to have you here. I think the reason that this created so much of a stir is that so many people, including me, assumed that you would be the man running Berkshire when Warren Buffett left. What happened? Why did you resign.
SOKOL: Well yeah, let me start there because I think that, that's probably the most important issue, which is the resignation. This had been in my mind for about two-and-a-half years and I've talked with Warren over the time. It's got nothing β first of all let me say Berkshire is a fabulous company. Warren's been a mentor, an adviser, a teacher to me for eleven years and it's been one of the best experiences of my life. The reality is β what I like to do is build companies. And Berkshire is a place, if you have my personality, you get pulled into a lot of detail. And NetJets was a great example.
What I've wanted to do for the last two-and-a-half years is step back and basically invest our family money and build kind of a mini-Berkshire, if you will. Obviously, not the insurance side 'cause I don't have the expertise there. But invest our money and control my schedule a little bit more after 27 years of being a CEO. So that's been the issue. About two years ago, I raised it with Warren and then he asked if I could help with NetJets. And I tend to be the kind of person that if asked β I owe Warren a lot β was happy to do it. Expected to be there around three months β 20 months later. You know, we have a great team in place today. And that's really where all β I drove this time frame I felt with Jordan Hansell and Bill Noe and Adam Johnson and Kenny Dichter and the group that we have now at NetJets. They've got a great business plan. They're solid individuals. They'll do a fantastic job there. I am an owner and will continue to be and am proud of what they do. Greg Abel at MidAmerican, frankly a world-class CEO, doesn't need my help. Todd Raba at Johns Manville.Those were the areas that I was responsible for, and they're all in great shape. And so, the time was right. And you know it's the right thing for myself and for my family and for those folks. They don't need my help anymore. So that's β it's nothing more than that. It's no disrespect meant to Berkshire or Warren. I frankly love both of them. Significant shareholder of Berkshire, for me anyway, and Warren's β there's no individual in business that I respect more in the world than Warren.
JOE KERNEN: Do you know that you weren't the name in the envelope?
SOKOL: (Laughs) You know Joe, it's a great β I think this should end that speculation finally. I don't know what names are in the envelope. It's never been discussed with me. I've never had a conversation with Warren or any board member about it. And to be honest, I think that's the way it should be. I think until the board makes its decision, anybody knowing is a mistake.
JOE: You have tried to resign within the last two years and Buffett has talked you out of it?
SOKOL: Yes. Yeah.
BECKY: So why, why couldn't they talk you out of it this time.
SOKOL: Well β
BECKY: Did they attempt?
SOKOL: The last time I realized it was a mistake. But I made a commitment to help get NetJets sorted out. I tend to be a person that fulfills commitments, but once I finished that I realized that it was just not the right thing.
JOE: He didn't try to talk you out of it this time?
SOKOL: He did not.
BECKY: I guess the question that some people have asked is, why create your own mini-Berkshire when you could be running the actual Berkshire?
SOKOL: Well, there are two reasons really. One is β to be honest β Warren's not going anywhere. And by the way, it's just not a job I would aspire to, because nobody is going to do it as well as Warren does. And there's going to be a lot of change that comes with that. But the reality is Warren's not going anywhere. He's in great shape. He's every bit as sharp today as he was when I first met him eleven or twelve years ago. I actually think in some ways he's gotten better because he seems to have an even broader perspective than he did before. He's incredibly intelligent and insightful. And frankly, Berkshire is very fortunate to have him. But I'd like to do kind of like what he did in 1965, which is invest my own money, control a significant piece of it and control my own schedule. I admire enormously what he's done. But whoever replaces Warren will not get to do it the way he does it. He owns 34 percent of the company. And again, none of that is a criticism. I actually β if I could be a thousandth as successful as he is when I am done and when I'm 75 or 80, I'll be real pleased.
BECKY: You know, the questions come out of this though, revolving your ownership in Lubrizol (LZ) shares, and the timing on that as you were bringing this deal to Berkshire as a potential acquisition.
SOKOL: Let me hit two things there. One is, first of all, it was in the press releasein an effort to be a hundred percent transparent. The goal, which is a little interesting given some of the comments I've read and that β I thought full disclosure was a good thing. And the purpose there was those shares, my ownership there, would come out 30 or 60 days from now when the voting takes place, etc., on that transaction. And we did not want people to look back and say, 'Why didn't they tell us that?' So it's out there.
The thing people need to understand is, I have never had any authority at Berkshire to invest a dollar in stocks. I have a lot of authority within MidAmerican, Johns Manville, Lubrizol. But I've always been looking for transactions, both to invest in personally, and then if I thought a company was something that Warren might have an interest in, I would forward it to him. Lubrizol is exactly that. I got interested in Lubrizol β frankly I can't tell you where I first heard the name β sometime last fall. I pulled their 10-K. Found what they've been doing the past couple of years interesting. I made a decision to buy some shares. When I mentioned to Warren that I thought there was an opportunity, perhaps, for Berkshire, I told him that I owned some shares. And frankly, I didn't think he had any interest. Most of the ideas that I've forwarded to Warren over the years just were not companies that he had an interest in.
BECKY: Can we just walk through the timeline on this β
SOKOL: Sure.
BECKY: Because this is where some of the questions arise. On the 13th of December you instructed Citigroup to set up a meeting with Lubrizol. Is that true?
SOKOL: I had a meeting with Citibank. It was a, you know, I get dozens of packages from investment bankers all the time, on 'Hey, have you thought of some of these companies?' or this and that. I was going to be in New York for a series of other meetings including the American Football Coaches Association dinner that night. And so I told them if we don't want to have a meeting then β now they had sent me a package earlier, with a whole number of chemical companies listed in it, again, all public information. And they wanted to sit down and see if I wanted to follow up on that. I mentioned to 'em when they called, I said, 'Listen, I'm going to be in New York on the 13th. You know, let's talk.' Only a couple of them even seemed to be interesting. And I had mentioned Lubrizol as one of those because it was a company that I'd already been looking at, and since it was on their list I said, 'Well, if we're going to sit down, let's talk about it.'
Rest of interview is here: http://www.cnbc.com/id/42365586/?CNBC_TRANSCRIPT_%C2%A0_David_Sokol_Defends_His_Controversial_Lubrizol_Stock_Purchases
BECKY QUICK: Let's get to the man involved in our top story this morning, David Sokol, who is the man who was widely regarded as the leading candidate to succeed Warren Buffett at Berkshire Hathaway. He tendered his resignation earlier this week and he joins us right now on set to explain some of the events leading up to his resignation. And David, thank you very much for coming in today.
DAVID SOKOL: Glad, to be here Becky.
BECKY: Well, we're thrilled to have you here. I think the reason that this created so much of a stir is that so many people, including me, assumed that you would be the man running Berkshire when Warren Buffett left. What happened? Why did you resign.
SOKOL: Well yeah, let me start there because I think that, that's probably the most important issue, which is the resignation. This had been in my mind for about two-and-a-half years and I've talked with Warren over the time. It's got nothing β first of all let me say Berkshire is a fabulous company. Warren's been a mentor, an adviser, a teacher to me for eleven years and it's been one of the best experiences of my life. The reality is β what I like to do is build companies. And Berkshire is a place, if you have my personality, you get pulled into a lot of detail. And NetJets was a great example.
What I've wanted to do for the last two-and-a-half years is step back and basically invest our family money and build kind of a mini-Berkshire, if you will. Obviously, not the insurance side 'cause I don't have the expertise there. But invest our money and control my schedule a little bit more after 27 years of being a CEO. So that's been the issue. About two years ago, I raised it with Warren and then he asked if I could help with NetJets. And I tend to be the kind of person that if asked β I owe Warren a lot β was happy to do it. Expected to be there around three months β 20 months later. You know, we have a great team in place today. And that's really where all β I drove this time frame I felt with Jordan Hansell and Bill Noe and Adam Johnson and Kenny Dichter and the group that we have now at NetJets. They've got a great business plan. They're solid individuals. They'll do a fantastic job there. I am an owner and will continue to be and am proud of what they do. Greg Abel at MidAmerican, frankly a world-class CEO, doesn't need my help. Todd Raba at Johns Manville.Those were the areas that I was responsible for, and they're all in great shape. And so, the time was right. And you know it's the right thing for myself and for my family and for those folks. They don't need my help anymore. So that's β it's nothing more than that. It's no disrespect meant to Berkshire or Warren. I frankly love both of them. Significant shareholder of Berkshire, for me anyway, and Warren's β there's no individual in business that I respect more in the world than Warren.
JOE KERNEN: Do you know that you weren't the name in the envelope?
SOKOL: (Laughs) You know Joe, it's a great β I think this should end that speculation finally. I don't know what names are in the envelope. It's never been discussed with me. I've never had a conversation with Warren or any board member about it. And to be honest, I think that's the way it should be. I think until the board makes its decision, anybody knowing is a mistake.
JOE: You have tried to resign within the last two years and Buffett has talked you out of it?
SOKOL: Yes. Yeah.
BECKY: So why, why couldn't they talk you out of it this time.
SOKOL: Well β
BECKY: Did they attempt?
SOKOL: The last time I realized it was a mistake. But I made a commitment to help get NetJets sorted out. I tend to be a person that fulfills commitments, but once I finished that I realized that it was just not the right thing.
JOE: He didn't try to talk you out of it this time?
SOKOL: He did not.
BECKY: I guess the question that some people have asked is, why create your own mini-Berkshire when you could be running the actual Berkshire?
SOKOL: Well, there are two reasons really. One is β to be honest β Warren's not going anywhere. And by the way, it's just not a job I would aspire to, because nobody is going to do it as well as Warren does. And there's going to be a lot of change that comes with that. But the reality is Warren's not going anywhere. He's in great shape. He's every bit as sharp today as he was when I first met him eleven or twelve years ago. I actually think in some ways he's gotten better because he seems to have an even broader perspective than he did before. He's incredibly intelligent and insightful. And frankly, Berkshire is very fortunate to have him. But I'd like to do kind of like what he did in 1965, which is invest my own money, control a significant piece of it and control my own schedule. I admire enormously what he's done. But whoever replaces Warren will not get to do it the way he does it. He owns 34 percent of the company. And again, none of that is a criticism. I actually β if I could be a thousandth as successful as he is when I am done and when I'm 75 or 80, I'll be real pleased.
BECKY: You know, the questions come out of this though, revolving your ownership in Lubrizol (LZ) shares, and the timing on that as you were bringing this deal to Berkshire as a potential acquisition.
SOKOL: Let me hit two things there. One is, first of all, it was in the press releasein an effort to be a hundred percent transparent. The goal, which is a little interesting given some of the comments I've read and that β I thought full disclosure was a good thing. And the purpose there was those shares, my ownership there, would come out 30 or 60 days from now when the voting takes place, etc., on that transaction. And we did not want people to look back and say, 'Why didn't they tell us that?' So it's out there.
The thing people need to understand is, I have never had any authority at Berkshire to invest a dollar in stocks. I have a lot of authority within MidAmerican, Johns Manville, Lubrizol. But I've always been looking for transactions, both to invest in personally, and then if I thought a company was something that Warren might have an interest in, I would forward it to him. Lubrizol is exactly that. I got interested in Lubrizol β frankly I can't tell you where I first heard the name β sometime last fall. I pulled their 10-K. Found what they've been doing the past couple of years interesting. I made a decision to buy some shares. When I mentioned to Warren that I thought there was an opportunity, perhaps, for Berkshire, I told him that I owned some shares. And frankly, I didn't think he had any interest. Most of the ideas that I've forwarded to Warren over the years just were not companies that he had an interest in.
BECKY: Can we just walk through the timeline on this β
SOKOL: Sure.
BECKY: Because this is where some of the questions arise. On the 13th of December you instructed Citigroup to set up a meeting with Lubrizol. Is that true?
SOKOL: I had a meeting with Citibank. It was a, you know, I get dozens of packages from investment bankers all the time, on 'Hey, have you thought of some of these companies?' or this and that. I was going to be in New York for a series of other meetings including the American Football Coaches Association dinner that night. And so I told them if we don't want to have a meeting then β now they had sent me a package earlier, with a whole number of chemical companies listed in it, again, all public information. And they wanted to sit down and see if I wanted to follow up on that. I mentioned to 'em when they called, I said, 'Listen, I'm going to be in New York on the 13th. You know, let's talk.' Only a couple of them even seemed to be interesting. And I had mentioned Lubrizol as one of those because it was a company that I'd already been looking at, and since it was on their list I said, 'Well, if we're going to sit down, let's talk about it.'
Rest of interview is here: http://www.cnbc.com/id/42365586/?CNBC_TRANSCRIPT_%C2%A0_David_Sokol_Defends_His_Controversial_Lubrizol_Stock_Purchases
