Warren Buffett’s security has not been a big priority to Buffett, Berkshire Hathaway’s board of directors, and Berkshire Hathaway stockholders for years. Buffett is unlike other billionaires or CEOs because even though he is worth over $40 billion, he still lives in a house that he bought for $30,000 in 1958. He hates spending money because he understands the time value of money, and because he is able to compound his money at high rates of return, spending a $1 today means giving up a lot more in the future. Therefore, it is no surprise that he hasn’t been too excited to spend money on something like personal security.

Even though Buffett attempts to live like a regular person, his unparalleled success makes him a target for money extortion. While it may be obvious that Buffett needs protection, it wasn’t until September 2007 that Buffett and Berkshire Hathaway’s board of directors realized that his security should not be taken lightly. According to the Omaha World-Herald, a man wearing a dark stocking cap and a dark baseball cap rang the doorbell at Buffett’s house. Fortunately, the security guard was able disarm the man; however he and authorities could not track him down. Based on Berkshire Hathaway’s proxy documents, the company spent $315,709 in 2008 and $344,490 in 2009 on Buffett’s security services. But is this enough?

First, let’s look at what other companies spend on CEO’s security protection. According to Equilar, a company that tracks executive compensation, Dell, Disney, and FedEx spent $1.2 million, $0.6 million, and $0.6 million on the personal security of their CEOs in 2008. Dell paid four times what Berkshire Hathaway did, and Disney and FedEx paid two times as much. Are these CEOs more important to their companies than Buffett is to Berkshire Hathaway? This is obviously debatable.

However, Buffett is more than just a CEO – he is a celebrity. Millions of people admire him and every year he hosts the Berkshire Hathaway annual shareholders’ meeting where more than 40,000 people come to Omaha to listen to his words of wisdom. How many other CEOs enjoy this kind of popularity? None. Since he is a celebrity, let’s look at what other celebrities spend on personal security. According to How much does it cost to be Britney Spears, Spears spends close to $500,000 a year on bodyguards and other security measures. According to Celebs shell out big bucks for security, rapper 50 Cent spends a little over $1 million a year on security. Some might think that comparing Buffett’s security needs to 50 Cent’s might be a stretch because Buffett’s level of threat, which affects the price of security, is much lower than 50 Cent’s who has made some enemies. However, according to Thomas Werther, co-owner of Sector Mike Security and Investigations, 50 Cent’s security expenditure is in the lower range of what high-profile individuals pay for personal protection. His security expenditure equates to $20,000 per week or about $2,800 per day. Based on my telephone conversation with Werther, the cost of a modest bodyguard in New York is $75 per hour. What does $2,800 per day get you? It gets you 37 bodyguard hours per day, which can be allocated into one bodyguard for 24 hours plus a second one for 13 hours.

In Buffett’s case, Berkshire Hathaway’s security bill translates into about $950 per day which gets him 12 bodyguard hours, assuming $75 per bodyguard hour. Because Werther’s company is located in New York, the rate of $75 per bodyguard hour is high in comparison to Omaha where the cost of living is much lower than in New York. Werther told me that in Omaha $344,490 might get Buffett two bodyguards watching him around the clock. If you take $950 per day and divide it by 48 bodyguard hours for two people watching him, you get $20 per hour, which represents what his bodyguards are making. Considering Buffett’s paramount importance to Berkshire Hathaway, is spending $40 per hour getting him enough protection?  Isn’t Buffett worth more than $40 per hour to the company and its shareholders? This is something that Buffett himself and the board of directors have to evaluate, but they need to keep in mind he is more than a CEO – he is the biggest investing celebrity that ever lived.