Why Warren Buffett Earns Just $100,000 While CEOs Rake in Millions
While many CEOs are slammed for taking excessive salaries and multi-million dollar bonuses, Warren Buffett is not one of them. Although he is a world-renowned investor and the CEO of Berkshire Hathaway, the long-time businessman makes a modest $100,000 a year and hasn’t had a raise in more than 35 years, according to a recent company proxy statement. The 93-year-old makes a fraction of the $20 million yearly salary of his deputy and planned successor, Greg Abel, Reuters reported, but has a strategic reason why.
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Buffett Requested the $100,000 a Year Salary
Known for his financial prowess, long-term investing approach and generous philanthropic efforts, Buffett wants to set a positive example for CEO salaries, according to Business Insider. “Buffett’s slim pay packet reflects his belief that CEOs should be incentivized to deliver long-term success for their companies — and that huge salaries, big bonuses and short-dated stock options encourage near-term thinking,” the outlet reported. In addition, he wants to show his dedication to the company and shareholders.
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He Does Not Expect a Pay Increase
Buffett is content with his small annual earnings and the proxy also stated that his salary is reviewed every year. “Due to Mr. Buffett’s desire that his compensation remain unchanged, the Committee has not proposed an increase in Mr. Buffett’s compensation since the Committee was created in 2004.” The document continued, “Prior to that time, Mr. Buffett recommended to the Board of Directors the amount of his compensation. Mr. Buffett’s annual compensation has been $100,000 for more than 35 years and Mr. Buffett has advised the Committee that he would not expect or desire such compensation to increase in the future.”
Buffett Returns Half His Salary to Berkshire
According to Business Insider, the billionaire investor only keeps half of his salary and gives Berkshire $50,000 back as reimbursement for using employees for personal use to mail letters and make phone calls during business hours.
Buffett Lives a Frugal Lifestyle
Celebrated as a global role model, Buffett lives humbly despite his billionaire status. As reported by CNBC, he famously lives in the same Omaha, Nebraska house that he bought in 1958 for $31,500. In addition, he also opts for an older car over a new expensive one and stops at McDonald’s for breakfast on his way to work, Business Insider reported.
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