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- Ted and Todd's variable compensation is based primarily on their portfolio's excess return over the S&P, not on some other notion of intrinsic value of their public securities. You can read the structure here :

“Both Todd and Ted will have performance pay based on 10 percent of the excess return over the S.&P., averaged over multiple years,” Mr. Buffett told me.

I guess it all depends on how many years are meant by ‘multiple years’. You have said that 5 and 10 years would be adequate for market returns to be similar to intrinsic value returns. I think it is clear that over 5 years, there can be quite a large discrepancy; 10 years would often be enough, and 15-20 years would almost always be enough. The stated arrangement doesn’t really settle our disagreement.

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