David L. Sokol

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David L. Sokol
David Sokol.jpg
Dave Sokol at the Berkshire Hathaway annual meeting
Born
David L. Sokol

1956
Omaha, Nebraska
NationalityAmerican

David L. Sokol (born 1956) is an American business executive. He served as chairman, president and CEO of NetJets[1] as well as chairman of MidAmerican Energy Holdings Company, of which Berkshire Hathaway holds a 100% and 89.8% stake respectively.[2] He resigned March 28, 2011.

Early life[edit]

The youngest of five children, David L Sokol was born in 1956 in Omaha, Nebraska. His father managed a grocery store in Omaha when he was born. He attended Catholic grade school and public high school.[3]

When Sokol was 11, his mother was diagnosed with breast cancer. To help out with expenses, Sokol worked as a paperboy, as a caddie at a golf course, and as a janitor in a hardware store. He also helped local farmers bale hay. In high school, he worked as a maintenance manager for an apartment complex. He also worked for a local grocery store, starting as a bagger and then in less than two years becoming the night manager.

Sokol was able to keep this job when he entered the University of Nebraska. Shortly before the end of his junior year in college, Sokol married. He moved out of his parents' home and into a trailer with his bride, Peggy. By the time he graduated, he had a child on the way. Sokol graduated in 1978 and went to work as a structural engineer for an engineering company in the United States, HDR, Inc.[4]

Professional career[edit]

Previously, Sokol served as the Chief Executive Officer of MidAmerican Energy Holdings Company (formerly CalEnergy Company Inc.) a subsidiary of Berkshire Hathaway Inc. from April 19, 1993 to April 16, 2008. He served as the President of MidAmerican Energy Holdings from April 19, 1993 to January 21, 1995. Formerly, among other positions held in the independent power industry, Sokol served as President and Chief Executive Officer of Kiewit Energy Company, which was a wholly owned subsidiary of Peter Kiewit Sons' Inc., and Ogden Projects Inc. Sokol served as Chief Executive Officer and Chairman of the Board of Managers of MidAmerican Funding LLC, a subsidiary of MidAmerican Energy Holdings, since its formation in March 1999. He served as a Manager of Berkshire.

Sokol serves as the Chairman of the Board of Ce Casecnan Water & Energy Co., Inc. He previously served as Chairman of Omaha Metropolitan Entertainment and Convention Authority and as a director of Omaha Airport Authority. He served as the Chairman of the Board of MidAmerican Energy Holdings Company since May 1994. He served as Chairman of HomeServices of America, Inc. (formerly HomeServices.Com Inc.) since inception in July 1999. He served as Chairman of Northern Electric PLC. He has been a director of HomeServices of America, Inc., since July 1999. He had been Director of MidAmerican Energy Holdings since March 1991. He served as a director of MidAmerican Funding LLC, since formation in March 1999. He served as Non-executive Director of BYD Company Ltd.,from August 4, 2009 to April 1, 2011.

He served as a director of Northern Electric PLC from January 1997 to June 1, 2007. He also served as a director of CE Electric UK Funding Company until June 1, 2007. He holds Bachelor of Science in Civil Engineering from University of Nebraska, Omaha in 1978 and Honorary Doctorate from Bellevue University Bellevue Nebraska.[5] In 2008, he authored and self-published "Pleased But Not Satisfied", which described his business philosophy.

Since departing Berkshire Hathaway, Sokol has been managing investments through Teton Capital, LLC, his family holding company.

Involvement with Berkshire Hathaway[edit]

Prior to his abrupt resignation in March 2011, David Sokol was widely regarded as the likely successor to Warren Buffett.[6] Often referred to as Buffett's Mr. Fix-It,[7] Sokol was tasked with rescuing underperforming Berkshire divisions Johns Manville and NetJets. Under Sokol's leadership Johns Manville was brought back on track and NetJets swung from a $157 million loss in 2009 to a $207 million gain in 2010.[8]

Sokol was also integral in the selection of acquisition targets at Berkshire. In 2008, Sokol flew to China to research car manufacturer BYD, which resulted in Berkshire acquiring a $230 million stake. This position was worth over $1.5 billion in 2010. Later in 2008, Sokol engineered the acquisition of Constellation for $4.7 billion, sparing the energy company from bankruptcy.[7]

Lawsuits[edit]

In April 2010, a Douglas County judge[9] found that Sokol, who was the CEO of MidAmerican Energy Holdings Company, decided to change future profit calculations in such a way that it eliminated the stake in a 1990s Philippines project for San Lorenzo Ruiz Builders & Developers Group. The judge said that Sokol and MidAmerican had acted "willfully and intentionally".[9] The court levied a $32 million[10] ruling against MidAmerican. This ruling may be worth $140 million in future profits.

In a second case, courts in San Francisco and Omaha ruled against MidAmerican for a total of $52 million[9] in past profits, while also restoring ownership to La Prairie and San Lorenzo. These rights could amount to $280 million in future profits.

The third lawsuit for $150 million alleges that Sokol "secretly resumed negotiations"[9] that led to a lower projected profit.

Resignation and Lubrizol-related share activity[edit]

Sokol purchased 96,060 shares of Lubrizol at a limit price of $104 per share between January 5 and 7, 2011. He presented the idea of Berkshire's acquiring Lubrizol to Buffett on January 14 or 15, 2011, and again after a January 25 meeting with Lubrizol's CEO. Berkshire Hathaway's board voted to acquire Lubrizol at $135 per share on March 13, 2011.[11]

On March 28, 2011, Sokol tendered his resignation from Berkshire Hathaway. In his press release detailing the resignation, Mr. Buffett detailed trading activity surrounding the Lubrizol acquisition, emphasizing that he did not believe anything unlawful transpired.[11]

References[edit]

  1. ^ "Cuts at NetJets delay expansion plans in Ohio". Springfield News-Sun. Retrieved 3 October 2009.
  2. ^ "Archived copy" (PDF). Archived from the original (PDF) on 2011-04-09. Retrieved 2011-03-31.CS1 maint: archived copy as title (link)
  3. ^ "Sokol Moves From Buffett's Heir Apparent to Rebuked Ex-Berkshire Executive". Bloomberg.
  4. ^ "David L. Sokol". Horatio Alger Association. Retrieved 1 May 2011.
  5. ^ "David L. Sokol". Bloomberg Businessweek. Retrieved 1 May 2011.
  6. ^ Pleven, Liam (March 31, 2011). "Buffett Successor List Gets Shorter". The Wall Street Journal.
  7. ^ a b Dumaine, Brian (August 2, 2010). "Warren Buffett's Mr. Fix-It: Full Version". CNN.
  8. ^ "Info" (PDF). www.berkshirehathaway.com. 2010.
  9. ^ a b c d "Stakes high in MidAmerican suits". Springfield News-Sun. Retrieved 3 October 2009.
  10. ^ Dumaine, Brian. "Warren Buffett's Mr. Fix-It: Full Version". CNN News. Retrieved 3 October 2009.
  11. ^ a b "Warren E. Buffett, CEO of Berkshire Hathaway, Announces the Resignation of David L. Sokol" (PDF). Mar 30, 2011. Retrieved Mar 31, 2011.

Sources[edit]