Warren Buffett Critiques Soaring CEO Pay Amid Musk’s $1 Trillion Package

Warren Buffett, in his final annual letter as CEO of Berkshire Hathaway Inc., has voiced strong concerns regarding escalating CEO compensation, a topic reignited by Tesla CEO Elon Musk’s unprecedented $1 trillion pay package. This package would require Tesla to achieve a staggering $8.5 trillion market capitalization, elevating Musk to a status as a trillionaire, with a current net worth of approximately $449 billion.

Buffett, who has led Berkshire Hathaway for over six decades, warned against a troubling trend in corporate America where top executives continually demand higher pay by comparing themselves to their peers. He described this cycle as driven by “envy and greed,” highlighting the negative impact it has on corporate culture. “Envy and greed walk hand in hand. And what consultant ever recommended a serious cut in CEO compensation or board payments?” he stated.

Public Criticism and Growing Inequality

Although Buffett did not mention Musk by name, he criticized the trend of publicizing CEO compensation. He argued that rather than fostering restraint, it has led to an unhealthy competition among executives to outdo each other’s pay packages. “Good intentions didn’t work; instead, they backfired,” Buffett wrote, emphasizing that CEOs leverage their peers’ earnings to justify their own pay increases and further raise board member compensation.

The issue of excessive CEO pay is increasingly contentious, especially in the context of widening income inequality in the United States. Following a recent government shutdown that lasted 43 days, Senator Bernie Sanders condemned Musk’s $1 trillion pay package, pointing out that 60 percent of Americans live “paycheck to paycheck.” According to a report by Oxfam, the wealthiest 10 billionaires in the U.S. gained $698 billion over the past year, with the top 0.1 percent now controlling nearly a quarter of the nation’s stock market wealth, compared to just 1 percent held by the bottom 50 percent.

Musk has responded to the backlash, arguing that his compensation is directly tied to Tesla’s performance, stating that the valuation-based plan aligns his earnings with the company’s success, a point that has drawn skepticism from critics.

Buffett and Musk: A Complicated Relationship

Despite the recent tensions, Buffett and Musk have experienced a mix of mutual admiration and critique over the years. Buffett publicly praised Musk in 2022 for Tesla’s remarkable achievements, although he acknowledged that he had missed the opportunity to invest in the company early on. Conversely, Musk has described Buffett’s cautious investment style as “super boring” and has questioned Buffett’s public persona, while still acknowledging Buffett’s significant influence in the investment world.

In his eight-page letter, Buffett also shared personal reflections, discussing life lessons and self-improvement. He expressed a sense of fulfillment about the second half of his life, advising readers to learn from their past mistakes and move forward. “Don’t beat yourself up over past mistakes, learn at least a little from them and move on. It is never too late to improve,” he wrote.

Buffett encouraged readers to choose their role models wisely, referencing Tom Murphy as an exemplary figure. He recalled the story of Alfred Nobel, who transformed his legacy after reading his own premature obituary, underscoring the idea that it is never too late to become the person one wishes to be remembered as.