Ahahaha sure:
Berkshire Hathaway Inc.’s Warren Buffett is scoring particularly well on a new rule requiring companies to disclose the ratio of a chief executive officer’s pay to that of the median employee.
His annual compensation of $100,000 was just 1.87 times the median employee’s pay of $53,510, a figure calculated from a sample of about two-thirds of Berkshire’s total employees, according to a filing released Friday. He also gives back about $50,000 to the company “for minor items such as postage or phone calls that are personal,” meaning his take-home pay would be less than that median figure.
First of all: Unlimited talk, text and data cell-phone plans will run you less than $1,000 a year; landlines are even cheaper. Warren Buffett spends ... $49,000 a year on ... postage? Like, for personal letters? It is a little mysterious.
But also: Warren Buffett makes $100,000 a year? Really? I mean, yes, it is famously his salary. But Buffett increases his wealth each year in two ways:
He gets paid for doing his job, and also he has billions of dollars invested in Berkshire Hathaway and most years Berkshire's stock goes up.
In 2017, Berkshire Hathaway's stock was up about 22 percent, meaning that the value of Buffett's shares increased by about $15.1 billion, to $84.1 billion.
So in a sense he made $15.1 billion in 2017, or $15.1001 billion if you include his salary, or $15.10005 billion if you deduct the stamps.
That's a pay ratio of about 282,435 to 1.
Is that the right way to count? Meh.
Every year Institutional Investor's Alpha publishes its "Rich List of the World's Top-Earning Hedge Fund Managers," and every year people write stories saying that the list reveals how much hedge fund managers "are paid" or "take home," and every year I point out here that it is actually mostly a list of how much those managers' investments appreciated. It is not really how much they are "paid." But people like to interpret it that way, and you can understand why, since for practical purposes that appreciation is a big part of their economic reward for running their hedge funds. Most years Buffett would be way above anyone on the hedge-fund-manager list, if he counted.
Obviously the Securities and Exchange Commission has good reason for counting only actual pay, and not stock appreciation, in its pay-ratio rules. And obviously Berkshire Hathaway has good reason for doing the calculation according to the rules. (And perhaps the median Berkshire employee also owns some stock that appreciated last year.)
I don't know exactly what those rules are meant to measure, though to be fair the SEC doesn't know either. ("Congress did not expressly state the specific objectives or intended benefits of Section 953(b)," sniffed the SEC when it begrudgingly adopted the pay-ratio rules in 2015, five years after Congress mandated them.) But in any case, it's clear that Warren Buffett's annual economic reward for running Berkshire Hathaway is more than $100,000. That's barely enough to cover his postage.
