Buffett propounds on executive pay
02/04/2007
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Warren Buffet, one of the icons of strong corporate governance, has again criticised high executive compensation in his latest letter to shareholders. In particular, he argued against the practice of setting executive pay based on how much CEOs in similar industries earn, calling this the “All-the-other-kids-have-one” approach to setting pay.

He also offered insight into what it will take to change the system: “Compensation reform will only occur if the largest institutional shareholders — it would only take a few — demand a fresh look at the whole system. The consultants’ present drill of deftly selecting ‘peer’ companies to compare with their clients will only perpetuate present excesses.”

Unfortunately, those familiar with Buffet’s letters to shareholders know that he never gives away all the answers.  However, as we have been following his comments over many years, Guerdon Associates can, we think, hazard a good guess at the pay structures Buffet employs at his own companies.

Still his letters are always an informative and entertaining read. This latest can be found here.

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