Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc. (BRK/A), was paid a $100,000 salary for a 30th straight year after warning that excessive executive compensation can hurt shareholders.
Buffett, 80, received no bonus in 2010 and he doesn’t get stock options or grants, the Omaha, Nebraska-based firm said today in a filing. Buffett’s personal and home-security services paid for by Berkshire cost $349,946. The company’s compensation committee has determined salaries since 2004. Buffett, Berkshire’s chairman and largest shareholder, formerly recommended his own salary to the board.
Buffett built Berkshire over four decades of acquisitions and stock picks, bringing the value of his personal stake in the company to about $50 billion, almost all of which he has pledged to charity. He has said executive compensation needs to be more closely tied to a company’s long-term performance, rather than to annual profits that may be wiped out.
“His own frustration with regard to executive pay practices is reflected in not only talking the talk, but he and his organization walk the walk,” said Frank Glassner, CEO of Veritas Executive Compensation Consultants in San Francisco. “He in the past noted he considers himself the ‘Typhoid Mary’ of compensation committees, so he very clearly believes in his mantra, that total shareholder return must take place before the executives are paid.”
Berkshire Class A shares rose about 21 percent in 2010 to $120,450 on the New York Stock Exchange. The stock has climbed another 5.7 percent this year to $127,346 as of 2:31 p.m.
Buffett told the Financial Crisis Inquiry Commission in May that top executives must be held responsible for the performance of companies that falter.
At the Top
“You need a person at the top who has all the downside that somebody has that loses their job working at an auto factory,” he said in an interview released by the panel in February. If a company fails, management should “give back five times the highest compensation they received in the previous five years.”
Berkshire was a failing textile manufacturer trading at about $15 when Buffett took control in 1965. Its net income last year climbed 61 percent to $13 billion, the highest since 2007. Shareholder equity, a measure of assets minus liabilities, rose 20 percent to $157.3 billion from $131.1 billion in 2009.
Buffett assembled an enterprise with businesses ranging from car insurance and underwear to ice cream and corporate jet leasing. Berkshire is the largest shareholder in Coca-Cola Co. (KO) and Wells Fargo & Co., and last year it paid $26.5 billion to acquire railroad Burlington Northern Santa Fe.
Vice Chairman Charles Munger, 87, again received a salary of $100,000, while Chief Financial Officer Marc Hamburg, 61, got $912,500, compared with $862,500 in 2009, the filing shows. For his own salary, Buffett told the firm’s committee “that he would not expect or desire such compensation to increase in the future,” according to the filing.
Buffett also received $75,000 in fees for his work on the board of the Washington Post Co., the publishing company in which Berkshire has a stake, the filing shows.
Todd Combs, the former hedge-fund manager hired to help oversee Berkshire’s investment portfolio, starting with a pool of $1 billion to $3 billion, will receive a salary and also a contingent payment based on performance relative to the Standard & Poor’s 500 Index.
“The hedge-fund world has witnessed some terrible behavior by general partners who have received huge payouts on the upside and who then, when bad results occurred, have walked away rich,” Buffett said in his annual letter to shareholders on Feb. 26. “We have arrangements in place for deferrals and carry forwards that will prevent see-saw performance being met by undeserved payments.”
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