In the first quarter through March 6, Berkshire Hathaway repurchased approximately $2.3 billion worth of stock, as calculated by Barron’s from information in the company’s proxy statement released late Friday.
During this period, Berkshire bought back around 3,800 Class A shares, with Class B stock buybacks converted to an equivalent amount of Class A shares. This marks an increase from the $2.2 billion of stock repurchased in the fourth quarter, suggesting a potential total of $3 billion or more in buybacks for the current quarter if the pace continues as seen in the first two months of the year.
The majority of buybacks in the quarter took place from Feb. 13 to March 6, estimated by Barron’s at approximately $1.7 billion, with about $600 million repurchased in the first six weeks of the quarter.
Investors closely monitor Berkshire’s buyback activity as an indication of Warren Buffett’s view on the stock’s valuation. Buffett, who determines the pace of repurchases, has emphasized his price consciousness in this regard.
Berkshire’s stock has performed well this year, with both Class A and B shares up approximately 14%, compared to a roughly 7.5% total return for the S&P 500 index. As of Friday, Class A shares closed at $618,133, up 0.9%, while Class B shares ended at $408.13, up 0.3%.
The proxy statement released by Berkshire Hathaway reveals that Greg Abel, the likely successor to CEO Warren Buffett, received total compensation of just over $20 million last year, up from $19 million in 2022. Abel, serving as a Berkshire vice chairman, oversees the company’s extensive non-insurance operations. Similarly, Ajit Jain, responsible for managing the company’s insurance businesses, also earned just over $20 million last year. Since their elevation to their current positions in 2018, Buffett, who determines their pay, has compensated them equally.
Berkshire Hathaway maintains a distinct approach to executive compensation compared to other major companies. Buffett, for instance, receives a salary of $100,000 annually with no bonus, a level of compensation he has upheld for over 35 years, expressing no desire for an increase. Notably, Buffett reimburses the company for personal expenses such as phone calls and postage, totaling $50,000 in 2023, consistent with previous years. While the company spent over $300,000 on Buffett’s personal security last year, this remains modest compared to expenditures by other companies like Meta Platforms on CEO security.
In line with his frugal ethos, Buffett personally covers the cost of his private jet travel through NetJets, a Berkshire subsidiary, and declines company-paid perks such as cars or country club dues for executives. He holds Berkshire Hathaway stock in high regard, avoiding its dispersion and refraining from granting stock compensation to executives or any employees. The proxy emphatically states, “Berkshire never intends to use Berkshire stock in compensating employees.”
Buffett determines the compensation for Abel and Jain, relying on subjective factors rather than complex formulas typical at most public companies. Berkshire eschews the use of compensation consultants in setting executive pay, a stance aligned with Buffett and Charlie Munger’s disdain for consultants. Munger famously remarked that he would prefer “throwing an asp down my shirt front” over hiring one. Buffett has jokingly stated that he would rise from his grave in anger if Berkshire were to employ pay consultants after his death, believing such consultants tend to inflate executive compensation.