Warren Buffett's Giveaway Plan Implies $17 Billion of Berkshire Stock a Year. Greg Abel Bought Back $4.5 Billion Last Quarter.

The CEO is the person who runs a company on a day-to-day basis. However, technically speaking, the CEO reports to the board of directors. The board of directors, in turn, report to the shareholders who elected them. This chain of control is important to remember because it means that very large shareholders often have a huge say in how a company is managed.

That is the backdrop investors need when considering Warren Buffett's plans to give away around $17 billion per year in shares he owns in Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB), the company he used to run as CEO. And it is also why Greg Abel's, Buffett's handpicked successor, repurchase of $4.5 billion in Berkshire Hathaway stock comes into the picture. But you probably shouldn't read too much into the timing of these two decisions. Here's what you need to know.

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Could Berkshire Hathaway eventually pay a dividend?

Warren Buffett didn't like the idea of paying dividends. He was the CEO and a large shareholder of Berkshire Hathaway (and a Wall Street icon because of his long history of investment success ), so nobody questioned that decision. However, Buffett's plan to give his shares to foundations run by his children could change the dynamic here in a big way.

Foundations created with large stock donations, such as the Hershey Trust or the Hormel Foundation, often use the dividends they collect to fund their philanthropic efforts. That way, the foundations don't have to sell shares to pay their bills. Meanwhile, these two foundations have significant influence over how Hershey (NYSE: HSY) and Hormel (NYSE: HRL) are operated because of their large stakes in the respective companies. The Hershey Trust has stepped in to prevent Hershey from being acquired, while one of the Hormel Foundation's specific goals is to ensure Hormel remains independent.

While it is unlikely that Buffett's children will do anything to change the way Berkshire Hathaway is run while their father is alive, it will be a whole new ballgame after he passes. It wouldn't be at all shocking to see these foundations agitate for Berkshire Hathaway to start paying dividends.

Is Abel trying to limit the impact of Buffett's stock giveaway?

There's not much that Greg Abel can do about this control dynamic. He will simply have to make his dividend case to the board of directors and hope they see things his way. Of course, Abel might decide that paying a dividend makes sense, noting that many large insurance companies pay dividends. Still, while Buffett is alive, it is unlikely that anything will change on the dividend front, given that Buffett is the chairman of the board. So Abel's buying back around $4.5 billion in Berkshire Hathaway stock in the second quarter probably wasn't related to Buffett's plans to give away stock.