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- Warren Buffett’s annual salary for the past 40 years has been $ 100,000.
- Berkshire Hathaway spends the amount on its security annually.
- Buffett owns about $ 100 billion in Berkshire shares and lives modestly.
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Warren Buffett is a legendary investor, leading one of the largest companies in the world and counting among the richest people in the world for decades. Still, he earns a modest annual salary of $ 100,000 – and he has had no pay rise for 40 years, according to the SEC filing.
As CEO and chairman of Berkshire Hathaway, Buffett recommends to his board how much he should be paid, and decides the rest of the directors’ remuneration. The 90-year-old has received $ 100,000 a year since 1980 – a fraction of the average salary of $ 15 million of S&P 500 CEOs in 2019.
Buffett also does not earn much from other sources. He earned double his salary in annual directors’ remuneration in the 1990s and early 2000s, before resigning as director of The Washington Post Company and resigning from other corporate boards.
The highest total remuneration he ever received in Berkshire was $ 525,000 in 2010, consisting of his $ 100,000 salary, $ 75,000 in directors’ fees and $ 350,000 allocated to his security expenses.
Berkshire spends far more on Buffett’s personal and home security than it pays him directly. To keep the boss safe, the company has cost an average of $ 339,000 a year since 2008, or $ 4.4 million in total.
Buffett does not need a large salary. He owns about $ 100 billion in Berkshire shares – which he gradually gives away – and doesn’t spend much: he lives in a modest family home, drives a basic car and eats breakfast at McDonald’s.
The investor also does not use a company car, does not belong to any clubs where Berkshire pays its fees, or aircraft owned by the company for personal use.
Buffett shared his views on salaries at Berkshire’s annual shareholders’ meeting in 2017 when asked how much his successor would be paid. He expressed the hope that the next CEO would already be rich and not be motivated to earn ten or 100 times the money their family needs to live on.
“They may even want to set an example by doing something that is much lower than what your true market value can say,” he continues, adding that it would be ‘wonderful’ if that were the case.
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Buffett believes CEOs need to be encouraged to deliver long-term success to their businesses. He believes that massive annual salaries, bonuses and short-term stock options encourage short-term thinking.
Charlie Munger – Buffett’s right-hand man and Berkshire’s vice-chairman – followed Buffett’s example. He has also been receiving a salary of $ 100,000 a year for several decades, according to the SEC.
In contrast, Ajit Jain and Greg Abel, who head Berkshire’s insurance and non-insurance divisions, are paid much more handsomely. Both men have earned a salary of $ 16 million over the past three years, plus a total bonus of $ 7 million each.
Eventually, Berkshire’s chief financial officer, Marc Hamburg, saw his salary rise from about $ 300,000 in 1996 to $ 3.3 million last year.