"[R]idiculously out of line with performance," a fact that's unlikely to change in the current environment.Looking ahead, Buffett predicts the following:
He said corporations should pay their CEOs relative to performance but added that CEOs today can receive a bigger payout for being fired than "an American worker earns in a lifetime of cleaning toilets."
As for the overall stock market, Buffett braces investors for more modest returns to come, citing increased "frictional" costs that eat away at performance. These include costs related to trading, advice and money management.Reduced earnings will also hurt the millions of retirees who have their money invested in pensions, 401K's, etc. Social security is still the safest investment for lower and middle income Americans who don't have the financial liquidity to ride out the lean years.
"These costs are now being incurred in amounts that will cause shareholders to earn far less than they historically have," writes Buffett.