Buffett Makes Less Than 2 Times What Average Berkshire Employee Does

By Douglas A. McIntyre Updated Jan 12, 2:21AM EST · Published Mar 17, 7:45AM EDT

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Buffett Makes Less Than 2 Times What Average Berkshire Employee Does — © Thinkstock

While the chief executive officers of many public corporations make hundreds of times what their average employees do, one famous CEO makes less based on the same scale. Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK-A) makes 1.9 times what the company’s average employee does.

According to the Berkshire proxy:

In light of the fact that Mr. Buffett’s total compensation is far less than almost all public company CEO’s, Berkshire believed that the cost/benefit of complying precisely with the requirements of Item 402(u) would provide little, if any, useful information to its shareholders. Therefore, Berkshire used a judgmental sample representing approximately 2/3 of the total employees of Berkshire and its subsidiaries to determine the median employee’s compensation.

The median employee was determined using 2017 W-2 wages for all U.S. employees and equivalent taxable compensation for all non-U.S. employees included in the sample. The median employee determination included all employees within the sample group who were employed at December 31, 2017. The annual total compensation for the median employee was calculated using the same methodology for calculating the total compensation in accordance with Item 402(c)(2)(x) of Regulation S-K.

Based on the information obtained as described above, the ratio of Mr. Buffett’s annual total compensation ($100,000) to the annual total compensation of the median employee ($53,510) was 1.87 to 1.

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Item 402(u) requires companies to make the calculation of the ratio. Item 402(c)(2)(x) is an extension of the rule.

Of course, Buffett is among the richest people in the world. According to the same filing, he owns 37.8% of the class A shares, which essentially means he controls the company. Several reports on Buffett’s net worth put it close to $90 billion.

As companies file their proxies and the ratio of CEO pay to that of an average employee, Buffett is certain to be among those with the lowest ratio, and he may have the lowest figure of all.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.