Warren Buffett’s wage was solely $100,000 final 12 months — a fraction of the $20 million raked in by his deputy and deliberate successor, Greg Abel.
Buffett will not be resentful although. As Berkshire Hathaway’s CEO and chairman, Buffett recommends to his board of administrators how a lot he ought to be paid, and units the compensation of Abel and different executives.
The world-famous investor has requested a $100,000 annual wage with no bonus or inventory awards for over 40 years. That is a tiny quantity in contrast with the roughly $17 million common compensation amongst S&P 500 CEOs in 2022.
Why does Buffett make so little?
Buffett’s slim pay packet displays his perception that CEOs ought to be incentivized to ship long-term success for his or her corporations — and that massive salaries, huge bonuses, and short-dated inventory choices encourage near-term pondering.
It additionally speaks to Buffett’s unusually modest way of life. Though his $134 billion of Berkshire inventory ranks him among the many richest individuals on the planet, Buffett nonetheless lives within the identical household dwelling he purchased for $31,500 in 1958. He additionally drives a decade-old automobile and grabs breakfast at McDonald’s on his method to work.
Buffett additionally does not have an organization automobile, belong to golf equipment the place Berkshire pays his dues, or use Berkshire-owned plane for non-work journeys, per the conglomerate’s newest proxy assertion.
He additionally fingers again $50,000 or half of his wage annually to reimburse Berkshire for his occasional use of staff, cellphone calls, and stamps for private duties.
Berkshire spent about $314,000, or greater than triple Buffett’s wage, on his private and residential safety final 12 months. That meant his whole compensation was $414,000, which Berkshire estimated was 5.4 occasions its median worker’s all-in pay final 12 months. For comparability, McDonald’s CEO Chris Kempczinski made 1,224 occasions greater than the median pay of his employees in 2022.
Buffett probably dietary supplements his wage with dividends and coupon funds from his private funding portfolio, which may very well be price billions of {dollars}.
ProPublica reported final 12 months that primarily based on leaked tax information, Buffett bought near $500 million of shares between 2000 and 2019, and disposed of bonds price much more.
The investor additionally likes to attenuate his tax invoice, and incomes a small wage helps with that. There isn’t any proof that he borrows in opposition to his firm’s inventory to fund his way of life like different executives.
Buffett has pledged to present nearly all of his fortune to good causes. He is already gifted over half of his Berkshire inventory to the Invoice & Melinda Gates Basis and 4 household foundations.
What has Buffett stated about Abel’s pay?
Buffett has stated it might be “terrific” if Berkshire’s subsequent CEO had been already rich and needed to set an instance by accepting a wage a lot decrease than his market worth.
The investor has put Abel in good stead to do this by paying him round $100 million in whole wage and bonuses during the last 5 years, together with a flat $20 million final 12 months, up from a $16 million wage and a $3 million bonus in 2022. Berkshire’s insurance coverage boss, Ajit Jain, has made the identical quantity.
Abel additionally obtained $870 million earlier than taxes in 2022, in trade for promoting his estimated 1% stake in Berkshire Hathaway Power to Berkshire.
The top of Berkshire’s non-insurance companies signaled final spring that he is keen to take a position extra of his personal cash in Berkshire, like Buffett who retains upwards of 98% of his wealth within the inventory. Abel purchased about $25 million price of Berkshire shares, boosting his stake by round a 3rd.
Abel earns a a lot larger wage than Buffett, however that might change as soon as he takes over as CEO if he subscribes to Buffett’s concepts round not losing shareholders’ cash, dwelling frugally, and having numerous pores and skin within the recreation.
