The Surprisingly Modest Salary Request of Pete Liegl and Its Impact on Berkshire Hathaway

In 2005, when Warren Buffett, the renowned CEO of Berkshire Hathaway, met Pete Liegl, the founder of Forest River, he was ready to negotiate a deal. However, what transpired left Buffett momentarily speechless.

Fast forward nearly two decades, that initial deal has turned out to be one of Berkshire Hathaway's most profitable acquisitions. In his recent annual shareholder letter, Buffett reflected on Liegl's unique contributions, describing him as "one of a kind" and noting that his leadership has brought "many billions" in value to Berkshire's shareholders.

How It All Started

Buffett recounted that he was introduced to Forest River via a letter from an intermediary on June 21, 2005. Impressed by the company’s fundamentals, he quickly arranged a meeting with Liegl, his wife Sharon, and their daughter Lisa in Omaha.

Unexpected Salary Negotiation

During their negotiation, Buffett asked Liegl what his salary expectations were. To his surprise, Liegl replied, "Well, I looked at Berkshire's proxy statement, and I wouldn’t want to make more than my boss, so pay me $100,000 per year." This unexpected request stunned Buffett, yet he agreed.

Liegl had one additional condition: a 10% bonus on earnings exceeding the company's current performance. Buffett accepted these terms, and over the next 19 years, Liegl excelled in his role, impressively outpacing competitors.

Current Performance and Impact

Today, Forest River stands as a multibillion-dollar business within the Berkshire Hathaway umbrella. Despite facing various economic hurdles, it has consistently contributed to Berkshire's consumer products group. In 2024, Forest River's revenue increased by 6.4%, with unit sales rising by 7.9%, aided by recent acquisitions.

Even in a challenging economic landscape like that of 2023, Forest River demonstrated resilience. In 2022, the company’s strong performance significantly boosted Berkshire Hathaway’s consumer products revenue by $481 million.

Berkshire Hathaway's Financial Growth

Recently, Berkshire Hathaway reported a remarkable increase in fourth-quarter earnings, largely due to robust insurance performance. Operating profits surged 71% to $14.53 billion, with insurance underwriting jumping 302% to $3.41 billion and investment income rising 50% to $4.09 billion. Overall, full-year operating earnings grew by 27% to $47.44 billion.

The Takeaway

In his letter, Buffett acknowledged that not every acquisition succeeds. However, leaders like Liegl, who built a thriving enterprise through exceptional talent rather than elite education, exemplify how one successful decision can result in transformative long-term gains.

Buffett, Liegl, Berkshire