Berkshire Hathaway CEO Greg Abel plans to spend entire pay on company shares, says, ‘it's not taking away from…’

Berkshire Hathaway Inc. Chief Executive Officer Greg Abel said he will allocate his entire take-home pay to acquire the conglomerate’s stock for as long as he’s in the role, Bloomberg reported.

“Absolute alignment with our shareholders, our partners, our owners is critical,” Abel said in an interview with CNBC on Thursday. “I already have some shares, but the goal was to continue to demonstrate alignment with them.”

Abel purchased approximately $15.3 million worth of shares this week, as per a regulatory filing. He stated that his ongoing commitment to buy shares after the company's annual results are released each year could total "hundreds of millions” of dollars in share repurchases throughout his career.

Share buyback update

Berkshire resumed share buybacks on Wednesday, while Abel, who said that executives believed the shares' “intrinsic value" was higher than their current market price. Following this announcement, Berkshire’s stock rose by as much as 2% in early trading in New York on Thursday.

The company's shares dropped earlier this week following the release of its fourth-quarter earnings on Saturday. The company’s operating profit dropped 30% during that period, mainly due to a 54% decrease in insurance underwriting earnings.

Shareholders had been analysing those results for signs of how Abel would approach share buybacks, as the conglomerate had abstained from doing so for a sixth consecutive quarter, the news portal noted. 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.”

Abel mentioned that Berkshire's plan to begin repurchasing shares won’t prevent it from investing its substantial $373 billion cash reserve into other opportunities.

“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 was quoted as saying. “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.”