With an annual salary of $100,000, Charles T. Munger is hardly your typical big-company chief executive. But he doesn't exactly need the money.
A founder of the Los Angeles law firm Munger, Tolles & Olson, Munger gave up practicing law in 1965 to focus on managing his investments. In 1978, he teamed up with fellow Omaha native Warren E. Buffett to run holding company Berkshire Hathaway Inc.
The results are the stuff of business legend, and Munger's Berkshire Hathaway shares are valued at $1.7 billion.
In addition to being Berkshire's vice chairman, Munger is CEO of Pasadena-based Wesco Financial Corp., an insurance and office furniture rental business that is successful in its own right.
Wesco shares gained 19.5% in 2006, besting the 13.6% increase for the Standard & Poor's 500 index of blue-chip companies. Its recent third-quarter profit of $23.5 million reflected a 32% gain over the same period a year earlier.
Like Buffett, Munger is a favorite of corporate watchdogs for his long-held view that too many executives feather their own nests at the expense of shareholders.
With executive compensation shaping up as an issue in Congress and at corporate annual meetings this spring, The Times asked Munger about his views on the subject. He turns 83 today.
*
How did CEO compensation get so out of whack?
Some of the worst sinners are compensation consultants. I have always said that prostitution would be a step up for these people. "Whose bread I eat, whose song I sing."
It isn't that the CEOs are such terrible people. It's that the system, with its envy-driven compensation mania, has developed to a place where it brings out the absolute worst in good people.
*
What about corporate directors? There's been a move to pay them more and try to make them more accountable. Would that help?
Paying directors more is going to make the compensation excesses harder to fix. The more you pay directors, the more the directors are going to want to pay the CEO. Putting more duties on the directors and giving them more money is like trying to extinguish a fire by pouring gasoline on it.
If I were running the world, I would not allow directors to be paid at all. I would make directors be exemplars and serve just as they serve on the boards of Harvard and Yale.
*
What about putting limits on how much a CEO can be paid?
