Warren Buffett's salary was just $100,000 last year - and he returned $50,000 to Berkshire Hathaway
Warren Buffett's salary was $100,000 last year, and he hasn't seen a pay rise in over four decades.
He repaid $50,000 to Berkshire Hathaway, partly to cover the cost of his personal calls and postage.
Buffett's net worth exceeds $100 billion thanks to his ownership of Berkshire stock.
Warren Buffett's salary was a modest $100,000 last year — and he handed back $50,000 to his company.
The billionaire investor and Berkshire Hathaway CEO has earned the same salary, with no bonus or stock awards, for more than 40 years. Berkshire spent triple the amount just on Buffett's personal and home security last year, its latest proxy statement shows.
Include security costs, and Buffett's total compensation was $402,000 last year, a fraction of the $18 million average among S&P 500 CEOs in 2021. Berkshire estimates he made 6.4 times as much as the conglomerate's median employee.
For comparison, McDonald's CEO Chris Kempczinski made $20 million, or 2,251 times the median salary at the fast-food giant in 2021.
Buffett may be worth over $100 billion on paper, but he lives simply, spends frugally, and hates wasting his shareholders' money. Neither the 92-year-old executive nor his 99-year-old business partner, Charlie Munger, use company cars or belong to any clubs where Berkshire pays their membership dues.
The pair don't use company-owned aircraft for personal trips. They pay standard rates to Berkshire-owned NetJets, which sells fractional ownership in private jets.
Buffett admits to occasionally enlisting employees for private tasks, and mailing letters and making phone calls on the company dime. However, he reimburses Berkshire by paying it $50,000 every year, the proxy statement says.
Both Buffett and Munger have told Berkshire's governance committee that they're happy with their $100,000 salaries, and neither expect nor desire a pay raise.
It's worth noting that Buffett didn't become a billionaire by earning a big salary. His wealth reflects his ownership of 227,416 of Berkshire's "A" shares, worth over $100 billion on paper.
Buffett has pledged to give more than 99% of his personal fortune to good causes. He has already gifted just over half of his Berkshire shares to the Bill & Melinda Gates Foundation and other charities since 2006.
The investor's meager compensation reflects his belief that CEOs should be incentivized to deliver long-run success for their companies. He's warned that massive salaries, big bonuses, and short-term stock options encourage short-term thinking.
Buffett also minimizes his income-tax bill by taking a small salary, and for now at least, he doesn't owe capital-gains taxes on his Berkshire shares until he sells them.
Other executives such as Elon Musk borrow against their stock to fund their lifestyles, which is more tax efficient than collecting a big salary. There's no indication that Buffett does that.
Berkshire takes a more conventional approach to compensating its other executives. Greg Abel and Ajit Jain, the respective bosses of Berkshire's insurance and non-insurance businesses, have received $16 million salaries and $3 million bonuses in each of the last four years.
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