{"id":716,"date":"2007-03-03T14:38:06","date_gmt":"2007-03-03T20:38:06","guid":{"rendered":"http:\/\/selectmetrix.com\/blogs\/2007\/03\/buffett-on-ceo-compensation\/"},"modified":"2007-03-03T14:38:06","modified_gmt":"2007-03-03T20:38:06","slug":"buffett-on-ceo-compensation","status":"publish","type":"post","link":"http:\/\/selectmetrix.com\/blogs\/2007\/03\/buffett-on-ceo-compensation\/","title":{"rendered":"Buffett On CEO Compensation"},"content":{"rendered":"<p>From the Pioneer Press&#8217; <a href=\"http:\/\/www.twincities.com\/mld\/twincities\/business\/16822692.htm?source=rss&amp;channel=twincities_business\" target=\"_blank\">Buffett too hard on director pay<\/a>:<\/p>\n<blockquote>\n<p>The media, he says, have scrutinized &#8220;CEOs who have received astronomical compensation for mediocre results.&#8221; At Berkshire Hathaway Inc., where the famously successful investor has long been chairman, things are different. Pay can be high, but only when there are results.<\/p>\n<p>&#8220;When we use incentives \u20ac\u201d <strong>and these can be large<\/strong> \u20ac\u201d they are always tied to the operating results for which a given CEO has authority,&#8221; Buffett wrote in his annual letter to shareholders, released Thursday.<\/p>\n<\/blockquote>\n<p>We&#8217;ve posted on CEO compensation before (<a href=\"http:\/\/selectmetrix.com\/blogs\/2006\/11\/ceos-and-shareholder-value\/\" target=\"_blank\">here<\/a>, <a href=\"http:\/\/selectmetrix.com\/blogs\/2006\/12\/ceo-trend\/\" target=\"_blank\">here<\/a> and <a href=\"http:\/\/selectmetrix.com\/blogs\/2007\/02\/the-underpaid-ceo\/\" target=\"_blank\">here<\/a>) since it is a topic at the forefront of today&#8217;s business news.&nbsp; Warren Buffett takes&nbsp;the right&nbsp;approach to the CEO compensation package in that he ties it to results (similar to a sales commission structure). <\/p>\n<p>He mentions something for which I was not familiar: <\/p>\n<blockquote>\n<p>But there&#8217;s one area where Buffett seems not to believe in pay for strong performance, an area where he seems to think any significant compensation can be corrupting. That area is compensation for independent directors. <\/p>\n<p>&#8220;Many directors who are now deemed independent by various authorities and observers are far from that, relying heavily as they do on directors&#8217; fees to maintain their standard of living,&#8221; Buffett wrote. &#8220;These payments, which come in many forms, often range between $150,000 and $250,000 annually.&#8221;<\/p>\n<\/blockquote>\n<p>Buffett is obviously a smart businessman and he seems to be on the right path here.&nbsp; The incentive for these independent directors is not aligned with bringing maximum shareholder value.&nbsp; You would think the media would be interested in this storyline as opposed to just carping about CEO compensation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>From the Pioneer Press&#8217; Buffett too hard on director pay: The media, he says, have scrutinized &#8220;CEOs who have received astronomical compensation for mediocre results.&#8221; At Berkshire Hathaway Inc., where the famously successful investor has long been chairman, things are different. Pay can be high, but only when there are results. &#8220;When we use incentives \u20ac\u201d and these can be large \u20ac\u201d they are always tied to the operating results for which a given CEO has authority,&#8221; Buffett wrote in his annual letter to shareholders, released Thursday. We&#8217;ve posted on CEO compensation before (here, here and here) since it is a topic at the forefront of today&#8217;s business news.&nbsp; Warren&hellip; <a class=\"read-more\" href=\"http:\/\/selectmetrix.com\/blogs\/2007\/03\/buffett-on-ceo-compensation\/\">Read More<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"bgseo_title":"","bgseo_description":"","bgseo_robots_index":"","bgseo_robots_follow":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[20],"tags":[],"class_list":["post-716","post","type-post","status-publish","format-standard","hentry","category-compensation"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p5Oho-by","jetpack-related-posts":[{"id":461,"url":"http:\/\/selectmetrix.com\/blogs\/2006\/11\/ceos-and-shareholder-value\/","url_meta":{"origin":716,"position":0},"title":"CEO&#8217;s and Shareholder Value","author":"Derrick Moe","date":"November 28, 2006","format":false,"excerpt":"A quick story from the Pioneer Press - Early exit cuts Stroucken pay package. The departing CEO of H.B. Fuller located north of St. Paul is taking a compensation package with him worth $18.5 million. The article simply states: The news release noted Stroucken is receiving $4 million less than\u2026","rel":"","context":"In &quot;Compensation&quot;","block_context":{"text":"Compensation","link":"http:\/\/selectmetrix.com\/blogs\/category\/compensation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1452,"url":"http:\/\/selectmetrix.com\/blogs\/2008\/03\/ceos-are-not-overpaid\/","url_meta":{"origin":716,"position":1},"title":"CEO&#8217;s Are Not Overpaid","author":"Derrick Moe","date":"March 4, 2008","format":false,"excerpt":"How is that for a title?\u00a0 Before I get flamed on this topic, let me pull some excerpts from a Human Resource Executive Online article (emphasis mine): A recent study conducted by DolmatConnell & Partners debunks the myth of runaway executive pay. The findings of the study tell a much\u2026","rel":"","context":"In &quot;Compensation&quot;","block_context":{"text":"Compensation","link":"http:\/\/selectmetrix.com\/blogs\/category\/compensation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2516,"url":"http:\/\/selectmetrix.com\/blogs\/2012\/08\/overpaid-jobs\/","url_meta":{"origin":716,"position":2},"title":"Overpaid Jobs?","author":"Derrick Moe","date":"August 16, 2012","format":false,"excerpt":"I grow tired of these comparison articles that look at pay for positions based on the median.\u00a0 It is almost impossible to compare roles across companies, markets, industries, etc.\u00a0 However, there is always one position within a company that takes the main blow\u2026CEO.\u00a0 I\u2019ve been fortunate to work with quite\u2026","rel":"","context":"In &quot;Compensation&quot;","block_context":{"text":"Compensation","link":"http:\/\/selectmetrix.com\/blogs\/category\/compensation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":631,"url":"http:\/\/selectmetrix.com\/blogs\/2007\/02\/the-underpaid-ceo\/","url_meta":{"origin":716,"position":3},"title":"The Underpaid CEO","author":"Derrick Moe","date":"February 3, 2007","format":false,"excerpt":"I am all for people making as much as they can in their careers which is why I do not understand the emotional attachment to CEO pay. If those CEOs can make that kind of money, more power to them. It doesn't bother me that Bob Nardelli made big money\u2026","rel":"","context":"In &quot;Compensation&quot;","block_context":{"text":"Compensation","link":"http:\/\/selectmetrix.com\/blogs\/category\/compensation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":345,"url":"http:\/\/selectmetrix.com\/blogs\/2006\/10\/pay-for-performance\/","url_meta":{"origin":716,"position":4},"title":"Pay for Performance","author":"Lee Fratzke","date":"October 6, 2006","format":false,"excerpt":"At Select Metrix, we constantly preach that compensation plans should be, in part, tied to an individual's performance. So when I was reading through my newsletters and RSS feeds, I was amazed to find stats from several different articles and feeds. First off, CEO turnover is up. The numbers show\u2026","rel":"","context":"In &quot;Compensation&quot;","block_context":{"text":"Compensation","link":"http:\/\/selectmetrix.com\/blogs\/category\/compensation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":410,"url":"http:\/\/selectmetrix.com\/blogs\/2006\/11\/ceo-turnover\/","url_meta":{"origin":716,"position":5},"title":"CEO Turnover","author":"Derrick Moe","date":"November 1, 2006","format":false,"excerpt":"We first posted about CEO turnover in this post. Now BusinessWeek comes along with an article titled The Great CEO Exodus. CEO's get a bad rap about their compensation packages, but it is not an easy job. Now consider the pressure being exerted on these leaders: Not so long ago,\u2026","rel":"","context":"In &quot;Trends&quot;","block_context":{"text":"Trends","link":"http:\/\/selectmetrix.com\/blogs\/category\/hiring\/trends\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"jetpack_featured_media_url":"","_links":{"self":[{"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/posts\/716","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/comments?post=716"}],"version-history":[{"count":0,"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/posts\/716\/revisions"}],"wp:attachment":[{"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/media?parent=716"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/categories?post=716"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/selectmetrix.com\/blogs\/wp-json\/wp\/v2\/tags?post=716"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<!-- WP Super Cache is installed but broken. 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