Berkshire's Abel sees 2015 pay surge 48 percent to $40.77 million

By Jonathan Stempel

(Reuters) - The energy unit of Warren Buffett's Berkshire Hathaway Inc (BRKa.N) on Monday said Gregory Abel, its chairman and chief executive, saw his compensation jump 48 percent last year to $40.77 million, reflecting a large incentive award.

Berkshire Hathaway Energy Co said Abel, 53, whom many investors view as a potential successor to Buffett as Berkshire's chief executive, was awarded $28 million under a profit-sharing plan tied to the unit's earnings.

Abel also received a $1 million salary and an $11.5 million bonus. His pay package was disclosed in Berkshire Hathaway Energy's annual report. Abel's compensation in 2014 was $27.58 million, including a $12 million incentive award.

The 2015 package makes Abel one of the best paid among U.S. energy executives and Berkshire's 361,270 employees.

It could also be a factor in his staying with Berkshire.

In a letter to shareholders that fueled speculation about Abel's future, Berkshire Vice Chairman Charlie Munger called Abel a "world-leading" performer who, in some ways, was a better businessman than Buffett.

"If he's that talented, he could have a host of other, extremely lucrative opportunities outside the company," said Minor Myers, a Brooklyn Law School professor specializing in executive pay.

"One goal of executive compensation is to retain people who have attractive alternative opportunities," Myers said. "You want to keep the best people at the firm, and this may be Berkshire's way of doing it."

Abel has been Berkshire Hathaway Energy's chief executive since 2008, and its chairman since 2011. He also sits on the board of the food company Kraft Heinz Co (KHC.O), in which Berkshire owns a 26.8 percent stake.

Berkshire Hathaway Energy's profit rose 13 percent last year to $2.37 billion, helped by higher electric and natural gas revenue and the 2014 purchase of Canada's AltaLink electricity transmission business.

The unit operates utilities in several U.S. states, natural gas pipelines, and Britain's Northern Powergrid. Berkshire owns 89.9 percent of Berkshire Hathaway Energy, and the unit accounts for 9 percent of the Omaha, Nebraska-based parent's profit.

In his annual letter to Berkshire shareholders on Saturday, Buffett said the unit's "outstanding performances explain why BHE is welcomed by regulators when it proposes to buy a utility in their jurisdiction."

Buffett's compensation is expected to be disclosed in March. His 2014 compensation totaled $464,011, including his usual $100,000 salary. Buffett is the world's third-richest person, according to Forbes magazine.

(Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum)