rolling Posted January 19, 2018 Posted January 19, 2018 Ajit Jain reports $109 million Berkshire stake https://www.reuters.com/article/us-berkshire-hathaway-stakes/possible-buffett-successor-jain-reports-109-million-berkshire-stake-idUSKBN1F806A Isn't that only about 10% of his yearly income?
alpha Posted January 23, 2018 Posted January 23, 2018 Small bolt-on acquisition for Berkshire Homeservices https://www.reuters.com/article/brief-silverhawk-realty-joins-berkshire/brief-silverhawk-realty-joins-berkshire-hathaway-homeservices-idUSFWN1PI10U
villainx Posted January 31, 2018 Posted January 31, 2018 I think it was Morgan Housel, but someone said that the past 15+ year BRK outperformance could be due to BRK not having the typical hedge fund fee structure. However, I'm assuming a lot of the sub CEO's are fairly compensated, so ...: 1) is that assertion true? if BRK top dogs got typical hedge fees, would performance suffer? 2) more relevant, post Buffet, would compensation impact BRK in a meaningful way? I guess I look at some of the supposed mini BRK, and they have been motoring a long with - I assume - more than fair compensation to management. Just wondering.
rb Posted January 31, 2018 Posted January 31, 2018 I think you are correct in the assumption that BRK managers are fairly compensated. BRK managers have long tenures. if they aren't compensated properly then why would they stay? Furthermore the initial assertion/premise is ridiculous. Why would an operating manager get compensated like a hedge fund manager? Does that happen anywhere except the proponent's weird imagination? Does Jamie Dimon get 2% of assets and 20% profit of JP Morgan? It's stupid. As for number 2, no compensation will not impact BRK in a meaningful way post Buffett.
Guest longinvestor Posted January 31, 2018 Posted January 31, 2018 Actually, compensation is decided by the manager himself/herself. Buffett asks them when they come to Berkshire and he's seldom changed a word in the agreement. He's addressed this at the meeting. Surely, they work out a properly crafted incentive based on microeconomics of the business. It's quite sound this way. No one is likely to ask for the horseshit hedge fund type deal with Buffett. Or his successor. Buffett called that compensation "merely for breathing".
John Hjorth Posted January 31, 2018 Posted January 31, 2018 From the 2017 AGM proxy, we know the 2016 compensation of Berkshire SVP & CFO Marc Hamburg as USD 1,550,000 [no bonus that year] plus a bit pension. So I suppose we will see the total compensation of Mr. Jain and Mr. Abel in the 2018 AGM proxy, right?
DooDiligence Posted January 31, 2018 Posted January 31, 2018 From the 2017 AGM proxy, we know the 2016 compensation of Berkshire SVP & CFO Marc Hamburg as USD 1,550,000 [no bonus that year] plus a bit pension. So I suppose we will see the total compensation of Mr. Jain and Mr. Abel in the 2018 AGM proxy, right? That'll be cool to see! --- http://uglymule.com/images/WEB&CharliesPay.png If these figures are accurate, every CEO in America should be ashamed of themselves.
gfp Posted January 31, 2018 Posted January 31, 2018 I believe Abel's previous compensation has been detailed in BHE's filings but I don't have them in front of me. Certainly they did end up disclosing that he holds something like $400 million of BHE shares that can be converted into BRK stock at his option. Much - if not all - of that was transferred from Sokol, so I'm sure there was a loan involved and it slowly vested to him over time. There may still be a loan behind it. And on Doo's chart, Buffett's compensation is mostly security services as he famously takes the same $100k a year as Charlie. Charlie usually reimburses Berkshire something like $50k a year for 'personal use of postage' and other personal stuff like secretarial time. edit - added graphic showing BHE comp
Guest longinvestor Posted January 31, 2018 Posted January 31, 2018 And another thing about the compensation regime. Buffett once threatened to come out of the box should anything egregious becomes more prevalent at Berkshire down the road. ;D
villainx Posted January 31, 2018 Posted January 31, 2018 My question/point with regards to compensation is that whoever becomes the new BRK CEO won't be content with $100K. Buffett, I believe, said something along the same line. I don't think BRK future compensation will be so out of line but it would be significant.
rb Posted January 31, 2018 Posted January 31, 2018 If the new CEO will need to get paid somewhere in the 20-70 million range it would not have a meaningful impact on Berkshire's profitability.
Guest longinvestor Posted February 1, 2018 Posted February 1, 2018 I have the sense that the next guy likely will not take $100K but he is more likely not to take $20 or $60 or $100 million. It is hard enough to step in those shoes, it is terrible optics to come in after Buffett and take a huge salary like that. That places a great amount of pressure, as if the pressure to deliver shareholder value is not enough in itself. Munger said it best. The real solution to excessive salaries is for the CEO's to voluntarily shun them. I believe that Abel/Jain or whoever steps into Buffett's shoes does just that. They continue the lifestyle they currently have been afforded. ;) Maybe the guy/gal after the next CEO does something else.
villainx Posted February 1, 2018 Posted February 1, 2018 I have the sense that the next guy likely will not take $100K but he is more likely not to take $20 or $60 or $100 million. It is hard enough to step in those shoes, it is terrible optics to come in after Buffett and take a huge salary like that. That places a great amount of pressure, as if the pressure to deliver shareholder value is not enough in itself. Munger said it best. The real solution to excessive salaries is for the CEO's to voluntarily shun them. I believe that Abel/Jain or whoever steps into Buffett's shoes does just that. They continue the lifestyle they currently have been afforded. ;) Maybe the guy/gal after the next CEO does something else. I thought Buffett already prepared folks for the bad optics by saying the next CEO would be granted some option based compensation. So... it should be - relatively - massive. But shouldn't be such that it would be impactful for shareholders. I guess also, by the time the next guy/gal after the next CEO, BRK will be very, very different, that's when some of the institutional stuff will wear then.
John Hjorth Posted February 1, 2018 Posted February 1, 2018 ... I thought Buffett already prepared folks for the bad optics by saying the next CEO would be granted some option based compensation. ... What is your source for posting this, villainx?
Cigarbutt Posted February 1, 2018 Posted February 1, 2018 https://finance.yahoo.com/news/one-qualification-warren-buffett-like-berkshires-next-ceo-172054448.html Modest and motivated. Rare breed.
DooDiligence Posted February 2, 2018 Posted February 2, 2018 https://finance.yahoo.com/news/one-qualification-warren-buffett-like-berkshires-next-ceo-172054448.html Modest and motivated. Rare breed. True dat (the stuff of hero's.) I'll bet there's a few, right here on COBF (maybe on a slightly different wealth scale, but modest, motivated & skilled, nonetheless.)
ValueMaven Posted February 3, 2018 Posted February 3, 2018 BRK was hammered hard yesterday...down 4% at one point!
AzCactus Posted February 3, 2018 Posted February 3, 2018 Market was down in general and the wells fargo scandal didn't help
rb Posted February 3, 2018 Posted February 3, 2018 Market was down in general and the wells fargo scandal didn't help The wells stuff came out after close.
Guest longinvestor Posted February 5, 2018 Posted February 5, 2018 Isn't it time when Buffett sends the letter to Loomis for final edit?
fareastwarriors Posted February 12, 2018 Author Posted February 12, 2018 Buffett's Berkshire Hathaway Insurer Enters Dubai With New Hires https://www.bloomberg.com/news/articles/2018-02-12/buffett-s-berkshire-hathaway-insurer-enters-dubai-with-new-hires
alpha Posted February 14, 2018 Posted February 14, 2018 Phillips 66 is going to buy back 3.28 billion worth of shares from BRK for $93.72 per share to keep BRK's holdings under 10% https://www.reuters.com/article/us-phillips-66-buyback-berkshire/phillips-66-to-buy-back-35-mln-shares-from-berkshire-hathaway-idUSKCN1FX33G
scorpioncapital Posted February 14, 2018 Posted February 14, 2018 "This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent,” Buffett said in a statement." I'm not too clear - this is not a bank stock, does Berkshire have a sub-10% requirement for refinery/oil stocks too? It sounds like in this case regulatory requirements were too onerous - but what would they be? Also, is it correct to understand that *either* Berkshire desires to own <= 10% of this OR it can own 100% (a full buyout) but not anything in-between?
Guest longinvestor Posted February 14, 2018 Posted February 14, 2018 "This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent,” Buffett said in a statement." I'm not too clear - this is not a bank stock, does Berkshire have a sub-10% requirement for refinery/oil stocks too? It sounds like in this case regulatory requirements were too onerous - but what would they be? Also, is it correct to understand that *either* Berkshire desires to own <= 10% of this OR it can own 100% (a full buyout) but not anything in-between? Believe it is the SEC reporting requirement of 3 days versus 3 months.
gfp Posted February 14, 2018 Posted February 14, 2018 If I had to guess it was probably more about FERC and/or DOT regulators that Berkshire Hathaway Energy deals with. It is possible that over 10% they start to consider PSX assets when Berkshire seeks certain approvals. Another possibility is that it was PSX's idea to buy the block, Warren was OK with it, and they used it as an excuse. "This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent,” Buffett said in a statement." I'm not too clear - this is not a bank stock, does Berkshire have a sub-10% requirement for refinery/oil stocks too? It sounds like in this case regulatory requirements were too onerous - but what would they be? Also, is it correct to understand that *either* Berkshire desires to own <= 10% of this OR it can own 100% (a full buyout) but not anything in-between?
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