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- Warren Buffett’s annual salary has been $ 100,000 over the past 40 years.
- Berkshire Hathaway spends three times that amount on its security each year.
- Buffett owns about $ 100 billion in Berkshire shares and lives modestly.
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Warren Buffett is a legendary investor, leads one of the largest companies in the world and has been among the richest people in the world for decades. Still, he earns a modest $ 100,000 annual salary – and has not had a salary increase in 40 years, the SEC files show.
As CEO and President of Berkshire Hathaway, Buffett recommends to the board of directors how much he should receive and decides the rest of executive compensation. The 90-year-old man has received $ 100,000 a year since 1980 – a fraction of the average $ 15 million salary for S&P 500 CEOs in 2019.
Buffett also doesn’t earn much from other sources. He earned double his salary in annual directors’ fees in the 1990s and early 2000s, before resigning his position as director of The Washington Post Company and stepping down from other corporate boards.
The highest total compensation he ever received at Berkshire was $ 525,000 in 2010, comprising his salary of $ 100,000, $ 75,000 in director fees and $ 350,000 allocated to his security costs.
Berkshire spends a lot more on Buffett’s personal and home security than it pays directly. Keeping the boss safe has cost the company an average of $ 339,000 a year since 2008, or $ 4.4 million in total.
Buffett does not desperately need a big salary. He owns about $ 100 billion worth of Berkshire shares – which he is gradually giving away for free – and does not spend much: he lives in a modest family home, drives a basic car and has breakfast at McDonald’s.
The investor also does not use a company car, does not belong to any club where Berkshire pays its fees or manages a company aircraft for its personal use.
Buffett shared his opinion on salaries at Berkshire’s 2017 annual shareholders’ meeting, when he was asked how much his successor would receive. He expressed hope that the next CEO is already wealthy and is not motivated to earn 10 or 100 times the money his family needs to live.
“They may even wish, perhaps, to set an example by committing themselves to something much lower than, in fact, what you can say is their true market value,” he continued, adding that it would be “fantastic” if it were that is the case.
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Buffett firmly believes that CEOs should be encouraged to provide long-term success for their companies. He believes that huge annual salaries, bonuses and short-term stock options encourage short-term thinking.
Charlie Munger – Buffett’s right-hand man and vice president of Berkshire – followed Buffett’s lead. He also received a salary of $ 100,000 a year for several decades, the SEC files show.
In contrast, Ajit Jain and Greg Abel, who head Berkshire’s insurance and non-insurance divisions, respectively, receive much more. Both men earned a salary of $ 16 million in each of the past three years, plus a total bonus of $ 7 million each.
Finally, Berkshire’s chief financial officer, Marc Hamburg, saw his salary rise from about $ 300,000 in 1996 to $ 3.3 million last year.