Buffett: Next Berkshire CEO should be only one to get options
NEW YORK (Reuters) - The next chief executive of Berkshire Hathaway should be the only one at the company to get options, Warren Buffett, the current head of the sprawling conglomerate, said on Monday.
In an interview with Fortune, Buffett said he had written a memo to the Berkshire (BRKa.N) board to suggest the next CEO should be "the only one who would receive options because he would be the only one who is responsible for the overall success of the operation."
Buffett, an investing icon and the world's third-richest man, came under fire last week when he said that he disagreed with a controversial equity compensation package for Coca-Cola (KO.N) management but nonetheless abstained from voting.
He told CNBC last week that he "didn't want to express any disapproval of management but we did disapprove of the plan."
He's since drawn broad criticism for not voting against the measure, which passed.
Buffett in the past has spoken out about stock options for executives as expensive and ineffective.
In 1995, for example, Buffett wrote: "Who, after all, refuses a free lottery ticket?" and called such arrangements "wasteful to the company."
Still, Buffett said on Monday that executive compensation is not out of whack with pay rates in the rest of the country.
"If you run a multibillion-dollar company the difference between a 10 and an eight is huge in terms of value," he said.
"Still, almost on a voluntary basis, I think it should be somewhat restrained in some cases."
He offered no more details on who the next Berkshire Hathaway CEO could be, a source of widespread speculation as investors wonder how much longer the octogenarian can continue in his current role.
Buffett, 83 and Charlie Munger, 90, the chairman and vice-chairman, respectively, of Berkshire Hathaway, have each drawn a salary of $100,000 each for more than 25 years.
In a securities filing this year, the company noted that "Mr. Buffett has advised the (Governance) Committee that he would not expect or desire such compensation to increase in the future."
Buffett's fortune is estimated at $65 billion by Forbes magazine.
(Reporting by Luciana Lopez; Additional reporting by Jonathan Stempel; Editing by Andrew Hay and Sandra Maler)
We are living longer but not creating financial plans to keep pace. Advisers give tips on how to make sure you don’t outlive your money. Video