May 6 (Bloomberg) -- Berkshire Hathaway Inc. investment managers Todd Combs and Ted Weschler receive $1 million salaries and can earn more if their bets beat the Standard & Poor’s 500 Index, Chairman Warren Buffett said.
The stock-pickers get 10 percent of the amount by which their portfolios outperform the benchmark on a three-year rolling basis, Buffett, 81, told shareholders yesterday at Berkshire’s annual meeting in Omaha, Nebraska.
“These two are perfect,” Buffett said. “They have every incentive to operate in a collaborative way” because part of each one’s pay is determined by the performance of the other.
Buffett is ceding portions of Berkshire’s $120 billion stock-and-bond portfolio to former hedge-fund managers Combs and Weschler as his company prepares for an eventual change of leadership. Combs joined Berkshire more than two years ago and registered gains with bets in 2011 on MasterCard Inc. and Dollar General Corp. Weschler’s hiring was announced in September.
“The market is up so it makes everybody look smarter,” Buffett biographer Andrew Kilpatrick said in an interview before the meeting. “At first glance it looks like the two of them are doing very well.”
The S&P 500 Index advanced 8.9 percent this year and 2.6 percent in the last 12 months. Berkshire, where Buffett is chairman and chief executive officer, has gained 6.3 percent since Dec. 31 and 2.2 percent over the last year.
MasterCard, Dollar General
Buffett, who built Berkshire with stock bets on companies including Washington Post Co. and Coca-Cola Co., has said he will continue to make the biggest investments. The assets under management by Combs and Weschler were increased by $1 billion to $2.75 billion each, Buffett said yesterday.
A stake in MasterCard, the world’s second-biggest payments network, was acquired by Combs at an average cost of about $246.74 a share in January and April, according to data compiled by Bloomberg. The stock ended May 4 at $439.69. Combs paid an average price of $32.07 apiece for 4.5 million shares of Dollar General in the three months ended in August. The discount retailer traded for $47.56 on May 4.
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