No. of Recommendations: 4
BINGO!!
" It is fascinating to come to the realization that Warren Buffett and Charlie Munger have always been fully aware that their extreme restraint regarding compensation was not necessary from a moral standpoint. It would indeed have been perfectly fair to compensate both men with properly structured options that reflected the tremendous value generated for Berkshire Hathaway shareholders. Instead, they both took symbolic $100,000 annual salaries for decades, leaving enormous wealth on the table.
What if Berkshire had granted options to Warren Buffett and Charlie Munger over the past half century? Obviously, the magnitude of the effect would depend on the specific terms of the grants, but Berkshire’s terrific performance combined with the effects of compounding would no doubt have made the value of those grants astronomical — certainly well into the tens of billions of dollars. What have Berkshire’s shareholders done to deserve this additional wealth, generated by effectively having Warren Buffett and Charlie Munger work for free all of these years? This is one reason for Berkshire’s “cult-like” following. Even those who have not attempted to figure the amount of this gift know that it is very substantial."
No. of Recommendations: 6
What if Berkshire had granted options to Warren Buffett and Charlie Munger over the past half century?
Well, let's say they granted options to themselves and to the other high execs in the various companies. Let's say in the 1970s they used $50M of Berkshire value for that each year, and in the 1980s they used $500M of Berkshire value for that each year, and in the 1990s they used $5B of Berkshire value for that each year, and in the 2000s they used $10B a year, and in the 2010s they used $20B a year. Now go back and either remove that amount from total Berkshire compounding OR go back and dilute the shares retroactively. What do you see? Yes! You will see that Berkshire as a whole isn't worth nearly as much as it is worth today because it lost a HUGE amount of compounding over 10, 20, 50, even 60 years. Or you might see that instead of X shares outstanding today, there are 2*X or 3*X shares outstanding by now. If there are 3*X shares outstanding by now, each share is $166 instead of $500.
No. of Recommendations: 0
Kind of makes you appreciate how incredible and superior MSFT, AAPL, GOOG, AMZN and META have been even with the dilution.
