The following is a report from Fortune.
Warren Buffett says not many people will know the name Pete Liegl, and yet he is a man who contributed “many billions” to the wealth of Berkshire Hathaway shareholders.
In his annual letter to shareholders, 94-year-old Buffett paid homage to “one-of-a-kind” Liegl, who died in November at the age of 80. Liegl was the CEO of Forest River, an RV maker nestled in Indiana, which turned out to be one of Berkshire Hathaway’s soundest investments.
Buffett told shareholders he was contacted on behalf of Liegl in June 2005: The introductory letter said Liegl would sell only to Berkshire, and outlined the price that the RV boss—the 100% owner of the brand—expected to be paid.
“I liked this no-nonsense approach,” Buffett recalls in the letter, and responded in kind.
A week later Buffett and Liegl met, with the man now worth $150 billion on the spot offering to pay Liegl whatever salary he wished for.
“I asked Pete what his compensation should be, adding that whatever he said, I would accept,” Buffett recalled. “This, I should add, is not an approach I recommend for general use.
“Pete paused as his wife, daughter, and I leaned forward. Then he surprised us: ‘Well, I looked at Berkshire’s proxy statement and I wouldn’t want to make more than my boss, so pay me $100,000 per year.’”
Buffett and his former right-hand man, Charlie Munger, have famously drawn the exactly six-figure salary for many years — a marked departure from other big-name CEOs, who often see their pay packages spiraling into the tens of millions.
“After I picked myself off the floor, Pete added: ‘But we will earn X (he named a number) this year, and I would like an annual bonus of 10% of any earnings above what the company is now delivering,’” Buffett continued. “I replied: ‘Okay, Pete, but if Forest River makes any significant acquisitions we will make an appropriate adjustment for the additional capital thus employed.’
“I didn’t define ‘appropriate’ or ‘significant,’ but those vague terms never caused a problem.”
Read the full report by Eleanor Pringle at Fortune here. Please note there is a paywall.
