CEO successor compensation hits a new high: Why is Berkshire Hathaway offering $25 million to Abel?

Berkshire Hathaway's latest executive compensation data has drawn attention. The new CEO Greg Abel's annual salary has been adjusted to $25 million. What does this figure reveal?

The Changing Era of Pay Gaps

For a long time, Berkshire Hathaway has been distinguished on Wall Street for its unique executive compensation system. Warren Buffett, who has led the company for over 60 years, is known for his modesty, consistently taking only a $100,000 annual salary for more than four decades. This symbolic compensation arrangement was once regarded as a hallmark of the company's culture.

However, as the leadership transition progresses, this tradition is changing. Starting in 2022, Buffett implemented a significantly increased compensation plan for Vice Chairman Abel, who is responsible for non-insurance businesses: $16 million in 2022 plus a $3 million bonus, $20 million in 2023, $21 million in 2024, now officially rising to $25 million.

At the same time, Ajit Jain, Vice Chairman overseeing insurance operations, received the same compensation package.

Decisions Behind the Leadership Transition

63-year-old Abel officially took over as CEO on January 1, ending his eight-year tenure as Vice Chairman. Along with the high salary, he holds approximately $171 million worth of Berkshire Hathaway stock and sold 1% of his energy business holdings to Berkshire Hathaway for $870 million in 2022.

Although Buffett, at 95, has stepped down as CEO, he remains Chairman of the Board and continues to guide the company's strategic direction as one of the world's wealthiest individuals.

From Symbolic Compensation to Market-Based Remuneration

Berkshire Hathaway has built the world's largest business empire—valued at over $1 trillion—with nearly 200 subsidiaries spanning Geico insurance, BNSF Railway, energy, manufacturing, and retail sectors. Its regulatory filings explicitly state that its executive compensation plan is “different” from most publicly listed companies.

But during the leadership transition, the compensation system is also evolving. From Buffett's symbolic $100,000 to the new CEO's $25 million, this not only reflects the practical demands of the position but also demonstrates the company's pragmatic attitude toward ensuring leadership continuity.