Warren Buffett: Compensation systems

We pay some very big money. We have managers that have made and will make in the tens of millions annually, and we have managers that, when we suffer, they suffer. But you’ve got to treat people fairly. Even though they don’t need the money, everybody wants to be treated fairly. And so the rationale for how you’re doing it should be understood, but there is no cross-Berkshire rationale at all…. The main thing to do is, in terms of market position and all that sort of thing, the real thing I really want to pay managers for is widening the moat that separates our business from our competitors’ businesses over time. Now, that gets very subjective, so I don’t have any perfect way of doing that. But that is always going through my mind in trying to design compensation systems.” 

—Warren Buffett