(Bloomberg) - Berkshire Hathaway Inc. Chief Executive Officer Greg Abel said he will use all of his take-home pay to acquire the conglomerate’s stock for as long as he’s in the role.
To that end, Abel bought up about $15.3 million of the shares this week, according to a regulatory filing. He said his commitment to continue doing so after the firm releases its annual results each year will add up to “hundreds of millions” of share repurchases over the course of his career.
“Absolute alignment with our shareholders, our partners, our owners is critical,” Abel said in an interview with CNBC Thursday. “I already have some shares, but the goal was to continue to demonstrate alignment with them.”
Berkshire also restarted share buybacks on Wednesday — with Abel saying that came after executives had determined that the so-called “intrinsic value” of those shares was above the price they were receiving by the market. The move sent Berkshire’s stock climbing as much as 2% in early trading in New York on Thursday after the announcement.
Berkshire’s shares had fallen earlier in the week after the company reported its fourth-quarter earnings on Saturday. The firm’s operating profit fell 30% in the period, driven by a 54% decline in its insurance underwriting earnings.
Shareholders had been parsing those results for signs of how Abel would approach share buybacks as the conglomerate had abstained from doing them for a sixth quarter in a row. Abel used his first annual letter to investors last week to reaffirm Berkshire’s shareholder return policy, largely ruling out the possibility of a dividend.
“We’ve maintained that we will retain a dollar if we see the opportunity to create more than a dollar for our shareholders —and that’s been the test,” Abel said. “So if we didn’t meet that test, we’d do a dividend.”
The decision to start repurchasing shares won’t stop Berkshire from looking to deploy its massive $373 billion pile of cash into other opportunities, Abel said.
“There’s also ‘Do we acquire stock?’ And when we’re looking at companies: ‘Do we acquire whole companies also?’ And then there’s the ‘Do we acquire equities?’” Abel said. “Each of those, with the amount of capital we have, can be done independently. So when we’re purchasing our shares, it’s not taking away from any of the other decisions.”
By Alexandre Rajbhandari
