Warren Buffett became the CEO of Berkshire Hathaway Inc (NYSE:BRK.A) in 1970. First, this article will compare CEO compensation with compensation at other large companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Warren Buffett’s Compensation Compare With Similar Sized Companies?
According to our data, Berkshire Hathaway Inc has a market capitalization of US$529.0b, and pays its CEO total annual compensation worth US$100k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m.
Most shareholders would consider it a positive that Warren Buffett takes less compensation than the CEOs of most other large companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at Berkshire Hathaway, below.
Is Berkshire Hathaway Inc Growing?
Berkshire Hathaway Inc has increased its earnings per share (EPS) by an average of 26% a year, over the last three years Its revenue is up 2.3% over last year.
This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Berkshire Hathaway Inc Been A Good Investment?
Boasting a total shareholder return of 54% over three years, Berkshire Hathaway Inc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It looks like Berkshire Hathaway Inc pays its CEO less than the average at large companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Warren Buffett deserves a raise!
It is relatively rare to see a modestly paid CEO when performance is so impressive. But it is even better if company insiders are also buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Berkshire Hathaway Inc.
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.