Author Topic: Compensation package for CIOs in the future  (Read 1757 times)

alwaysinvert

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Compensation package for CIOs in the future
« on: June 01, 2012, 06:29:20 AM »
Has Buffett addressed this issue?

Surely Combs' and Wechsler's current incentive structure would be very generous when they run all of Berkshire's investment portfolio? While outperforming the S&P will surely be harder, getting paid 10% of the outperformance would produce staggering wages for them. If they racked up 1% better returns than the general market with the current size of Berkshire's portfolio they would gain $72 million. I guess the odds are that they could do a whole lot better than a mere 1% outperformance, however it surely won't be 10%.

And how would the performance of wholly bought businesses be measured?

Maybe this is part of the lure for these hedge fund managers. While lowering their wages temporarily, when Buffett is gone they will have a great payday (if they perform).   


alwaysinvert

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Re: Compensation package for CIOs in the future
« Reply #1 on: June 01, 2012, 07:31:57 AM »
I'm not saying they wouldn't deserve the money, but they could become billionaires from Berkshire in pretty short order without really taking on any downside risk financially. I think it would be sensible for a significant amount of the compensation to be earmarked for buying BRK stock on the market with a lock-in investment period of something like 5-10 years.

Mephistopheles

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Re: Compensation package for CIOs in the future
« Reply #2 on: June 01, 2012, 07:54:59 AM »
I wouldn't be surprised if there is some major clawback measurement as well, and that will be their downside.