“It’s a logical thing to do when you’re leading the company,” he said.
Aleksandar Tomic, the director of the master of science in applied analytics and master of science in applied economics programs at Boston College, told Fortune Abel is trying to show the market his allegiance.
“Abel is really trying to signal strongly that the company will survive even after Buffett’s departure,” he said.
Still, Abel told CNBC the company has a longstanding policy of buying its own shares when it believes their “intrinsic value” is above the price being offered for them on the market. Abel also said he made the decision after consulting Buffett.
“Mr. Abel’s personal investment activity reflects long-term alignment with our shareholders – owners. Going forward, Mr. Abel has said he will invest his annual salary, on an after-tax basis, in Berkshire shares at the market price at the time of purchase, irrespective of where the shares may be trading,” said a Berkshire Hathaway spokesperson in a statement.
While Abel may be using his entire post-tax salary to buy the company’s stock, Tomic said he won’t be going hungry anytime soon.
Before becoming CEO, Abel received almost an entirely all-cash compensation plan, in line with Buffett’s no-stock compensation philosophy. Abel received a salary of $20 million in 2023 and $21 million in 2024. Because he was already earning a significant salary previously, he may have accumulated some savings to live on, Tomic said. Abel could also sell his newly acquired Berkshire stock if he’s in need of cash, he added.
“I believe that he probably has enough reserves for his living expenses, that his living expenses are probably not as high as his salary, and that there might be other parts of compensation that could put cash in his pocket like bonuses,” said Tomic.
While Abel may be putting most of his salary toward buying his own company’s shares, showing off one’s money was never part of Buffett’s philosophy at Berkshire, he said.
“These are not flashy guys,” Tomic said. “I think he’ll be fine.”
