QuestionerExplain the justification and rationalization for the exorbitant salaries, bonuses, perks, directors' fees, and other benefits that most public corporations are paying.
WarrenWell, I would say this, in my own view, the most exorbitant are not necessarily the biggest numbers. What really bothers me is when companies pay a lot of money. of money for mediocrity, and that happens all too often. But we have no quarrel in our subsidiaries, for example, for paying a lot of money for outstanding performance. I mean, we get it back 10 or 20 or 50 for one. And similarly in public companies, we think that there have been managers and our managers who have taken companies to many, many billions of market value more than would have happened with virtually anyone else. I am bothered by irrational pay systems, and I'm particularly bothered when average managers take really large sums. I'm bothered when they design or have designed for them systems that are very costly to the company. Maybe partly to make themselves look good because they want huge options themselves, so they feel that they give options widely throughout the country. widely throughout the company, so they design a system that is illogical company-wide, because they want one that's illogical for them personally. But large sums per se don't bother me. I'm not saying, you know, whether any individuals might want to take them or not. But I do not mind paying a lot of money for performance. It's done in athletics, it's done in entertainment, but in business, the people who are the 200 hitters and the people who would not attract a crowd as an entertainer. I've worked it out so that, I mean, the system has evolved in such a way that many of them take huge sums, and I think that's obscene, but I can tell you there isn't much you can do about it. The system feeds on itself, and companies do look at other companies. Proxy statements, every CEO does, and they say, well, if Joe Smith is worth X, I have to be worth more, and they tell the directors that certainly you wouldn't be hiring anybody that was below average, so how can you pay me below average? And the consultants come in and ratchet up the rewards. And it's not anything that's going to go away. It's like we were talking about campaign finance reform. Earlier, the people who have their hands on the switch are the beneficiaries of the system. And it's very hard to change the system when the guy whose hand is on the switch is benefiting enormously and perhaps disproportionately from that system. Thank you.