Berkshire Hathaway has a market value of $US350 billion, making it one of the largest companies in America and certainly the most complex.
And yet for overseeing this gigantic group which spans power generation, insurance, retailing furniture, to railroads, food distribution, manufacturing and a huge investment portfolio (worth more than $US130 billion alone), Buffett remains parsimonious about paying himself – unlike a few of the executives who work for him, and CEOs and chairs of many of the companies he invests in.
Buffett has always prided himself on how little he pays himself each year – just enough to get through the year. Unlike the likes of Rupert Murdoch or Donald Trump, Warren Buffett doesn’t pay himself (or maintain the fiction of being paid by the companies they control) millions of dollars.
The latest proxy statement filed on Friday night for Berkshire’s annual meeting at the end of April once again shows that Buffett’s compensation rose just 1% in 2015 to $US470,244.
The increase was due to an increase in the security costs for keeping the billionaire safe.
Buffett’s salary remained at $US100,000, the same amount he has received for more than a quarter century (it would have been a solid salary 25 years or more ago).
In Friday’s filing Berkshire said the cost of providing home and personal security services for Buffett rose to $US370,244 from $US364,011 a year earlier. Buffett also reimbursed $US50,000 to Berkshire for personal costs.
Unlike many CEOs and billionaires, he is legendary for not having multiple homes, holiday ranches, beachside villas, ski lodges and aircraft on call (although he is a member of the fractional aircraft ownership business he owns called NetJets).
He still lives in a 10-room home on less than three-quarters of an acre in Omaha, Nebraska, where he has lived for decades.
But he still controls nearly 19% of Berkshire’s stock, and 33% of its voting power, according to the proxy statement filing.
(Forbes magazine said on Friday that Buffett is worth $US66.2 billion, or well over $A80 billion.)
Berkshire vice chairman Charlie Munger, who is also a billionaire, drew a $US100,000 salary last year, as has been the case for years.
Friday’s filing showed that Berkshire’s Chief Financial Officer Marc Hamburg was the highest paid employee listed, with compensation of $US1.36 million last year.
There is absolutely no linking of pay and performance at the top of Berkshire Hathaway, but there is further down among the ranks of CEOs and general managers.
Executives who run some of Berkshire’s 90 or so business units make more than Buffett. Chief among them is Gregory Abel, chairman and chief executive of Berkshire Hathaway Energy, who made $US40.77 million last year.
Berkshire Energy is one of the largest generators of power from renewables in the US. It is also one of the lowest cost power companies in the US.
And the heads of some of Berkshire’s biggest investments – giants like Bank of America, Wells Fargo, IBM, Coca Cola and Amex, are all paid considerably more than Mr Buffett.
Late last month Berkshire Hathaway reported that fourth-quarter profit rose 32%, helped by improved results in its insurance operations and higher gains from investments and derivatives.
Net income rose to $US5.48 billion, from $US4.16 billion, in 2014. Quarterly operating profit rose 18% to $US4.67 billion, from $US3.96 billion.
For 2015 as a whole, profit rose 21% to $US24.08 billion, including a profit from the merger that created Kraft Heinz Co. Berkshire said operating profit rose 5% to $US17.36 billion.
