Deryck Maughan

Deryck Maughan was an executive at Salomon Inc. who took over prominent leadership roles after the 1991 Treasury bond scandal that engulfed the firm.

⚖️ Executive Compensation and Targets

During the 1994 Berkshire Hathaway Annual Meeting (1994 Meeting), Buffett and Munger discussed the performance and structure of Salomon Brothers. They specifically highlighted the compensation targets set for Maughan.

• The Target: Maughan had to hit a goal of 30% return on allocated equity and perform 10% above competitors to achieve a $24 million bonus.
• The Assessment: Buffett and Munger acknowledged that this target was "hellishly hard to hit." They equated the difficulty of achieving these metrics in the highly volatile and systemic risk-prone investment banking industry to hitting 150 home runs in a single baseball season.

While they recognized the improvements at Salomon under the new management, they remained realistic about the inherent difficulty of the business economics.

🔗 Connections

• Company: Salomon Inc.
• Source: 1994 Meeting