CEO compensation plans should be simple.

Berkshire Hathaway’s is among the simplest. Warren Buffet gets paid the same way as every other Berkshire shareholder - when the stock goes up. Other then his modest $100K salary, that’s all there is. It’s simple, shareholder aligned, and you could write it on the back of a table napkin.

Contrast that with today’s overly complex, unwieldy, misaligned CEO comp plans. Take the ever popular 10 year, fixed-price options plan (who wouldn’t). This plan locks in the value of stock options at a fixed price over time. On the surface this seems reasonable - to get a bigger payout, the CEO needs the stock to increase in price.

The problem is that the CEO can increase the stock price without delivering any value.

With fixed price options, many CEOs are taking the easy way out and simply using the company’s retained earnings to buy back stock at the end of the year, thus reducing the number of shares outstanding. Simultaneously, this increases the price of the company’s stock, while delivering no value to the shareholder (in what might have otherwise been dividends). This manager owner conflict is also never mentioned in proxy materials that request approval of a fixed-price option plan.

Getting fired today can also be particular bountiful for CEOs. Save for Bob Nardelli of HomeDepot, I can’t think of too many jobs that pay $210 million for a job poorly done.

Warren’s point is many of the models used today to compensate CEOs are misaligned with shareholders (fixed price options being one of them).

Warren feels that a shareholder revolt is necessary to bring back sanity to what is increasingly becoming a crazy world when it comes to CEO comp plans. By shining a light on the issues plaguing the industry, we can hopefully soon see real change in how CEOs are compensated and aligned with shareholder interests.

Congratulations to Squeaky - the undisputed winner of the Friendly Giant IdeaWarz tournament with his wickedly named idea GPS location member supplied content/POI.

This self confessed chocoholic likes to think of himself as a Cookie Athlete. The epiphany for this idea came to him while cruising cross country with his TomTom Go GPS receiver, looking for interesting points of interest (POI) and chocolate bars.

The Idea:

If you have a GPS, the next hot thing is good content–member content. Reference providers supply history or relevance for a particular GPS location. It could include good places to eat, places to see, important people that have lived there, etc. As a user, you use the system to plan your trip. As you plan it, you see various member supplied points of interest. You can decide which ones to include based on the member’s profile or perhaps the interest category. You could download MP3 content, videos, etc in advance of your trip but when you get near the POI the content is made available. If you take this a step forward, you could have history trips, learning trips or adventure trips. This also allows users to begin to rate content. Using this system a user could find local favorites for both food and entertainment. Businesses would be happy to advertise on the site as well as communities wishing to increase tourist dollars.

When Squeaky isn’t enjoying a fine piece of chocolate, a perfect day for him is riding his mountain bike on a fall day and beating his friends butt up a huge hill. All the chocolate has got to help

We would also like to congratulate our other tournament finalist jheaney. Jheaney fought a brilliant tournament with her idea U decide 4 me. We hope we see a lot more of this idea going forward in the community as it really has merit.

For winning an IdeaWarz Tournament, Squeaky will be able to buy himself a years worth of chocolate with the $1000 prize money, and do it in style wearing an authentically designed Jessye Cook t-shirt.

Congratulations again Squeaky on winning the Friendly Giant. It’s good to know there is another Cookie Athlete out there.

All the best to our up-and-coming contenders as you may soon see your name up here in lights beside Squeaky’s.

Until next time … May the best idea win!

I am a big fan of Warren Buffet, which is why I am so excited to name our latest IdeaWarz tournament The Oracle of Omaha (the city from which Warren hails, and still lives to this today).

Dubbed as one of the greatest investors of our time, Warren Buffet and his holding company (Berkshire Hathaway) have amassed one of the greatest fortunes ever. Warren has consistently beating the returns of the S&P 500 for over 40 years. A claim few in the world can make.

Here are a few fun facts you may not have known about Warren, and why I think he is such a cool guy.

1. He still does his own taxes.

With a net worth of over $52 billion, Warren still likes to do his own taxes.

2. He has been living in the same house since 1958 (which he bought for $31,500).

3. Warren’s salary is $100,000

On the surface, Warren’s salary not overly impressive. What is impressive is that Warren has never take a big salary or option plan. Warren gets paid solely on the basis of whether his stock goes up or down. I wish more CEOs managed their companies this way.

4. Berkshire Hathaway employees 19 people.

That’s not bad when your holding company oversees 180,000 employees, with revenue upwards of $81 billion. Many companies in corporate America could borrow a page from Warren’s play book productivity and efficiency.

5. He likes Cherry Coke and hamburgers.

With everything you read about Warren, it would be easy to think he is some kind of super monk who hides away in his ivory tower nibbling on bread and drinking magical tea. Nothing could be further from the truth. He walks the street as a common man (no bodyguards) and eats hamburgers and drinks Cherry Coke like anyone else in Omaha. He is also rumored to be a fierce bridge player (often playing with partner Bill Gates).

6. He gave away $30 billion to charity.

Not many of us will be ever to put that on our resumes. But it’s true. In 2006 Warren donated 83% of his holdings to the Bill and Melinda Gates Foundation. This was the largest donation in U.S. history.

I could go on about more great things Warren has done, but I hope you get the picture. He is one of those amazing individuals, that’s comes around once in a life time and leaves a real mark on the world. Which is why I am proud to dedicate this IdeaWarz tournament in his name.