Warren Buffett, the iconic investor and head of the colossal $800 billion Berkshire Hathaway empire, stands out not just for his investment acumen but also for his remarkably modest salary. Despite being one of the wealthiest individuals globally, Buffett has maintained an annual salary of just $100,000 for over four decades, as per Securities and Exchange Commission filings. This figure pales in comparison to the $18 million average salary of S&P 500 CEOs in 2021.
Buffett’s approach to his compensation is as unique as his investment strategy. As Berkshire Hathaway’s CEO and chairman, he recommends his salary to the board and is instrumental in deciding the paychecks of other executives. Notably, his highest annual earnings at Berkshire amounted to $525,000 in 2010, inclusive of his salary, directors’ fees, and security expenses.
Interestingly, Berkshire’s expenditure on ensuring Buffett’s security far outweighs his direct compensation, averaging about $300,000 annually since 2008. This frugal salary might seem unconventional, but Buffett, with an ownership of around $120 billion in Berkshire stock, leads a modest lifestyle, underlining his belief in simplicity.
Buffett’s views on executive compensation were candidly expressed at Berkshire’s 2017 annual shareholder meeting. He hoped his successor would be wealthy enough not to be driven by a hefty salary, emphasizing the importance of long-term success over immediate financial gains. This ethos is reflected in his approach to CEO incentives, favoring long-term company success over massive annual salaries and short-term stock options.
The late Charlie Munger, Buffett’s right-hand man and Berkshire’s vice-chairman until November 2023, mirrored this philosophy, also drawing a $100,000 salary for several decades. However, other top executives at Berkshire, such as Ajit Jain and Greg Abel, the latter being Buffett’s named successor, command much higher salaries, each earning $16 million in salary and a $3 million bonus annually.
In stark contrast, Berkshire’s CFO Marc Hamburg’s salary has steadily risen from about $300,000 in 1996 to $3.6 million in 2022.
Buffett’s salary, a modest figure in the world of million-dollar CEOs, is a testament to his unique perspective on wealth, responsibility, and corporate governance. It underscores a philosophy where personal wealth is secondary to corporate stewardship and long-term success – a rare stance in today’s corporate world.