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The issue was what was meant by fair. Salomon never disputed that the money was Gutfreund’s and that he had already earned it. The argument boiled down to whether Gutfreund would have been terminated had all the facts been known. Thus, the case became an exercise in proving that Gutfreund should have been terminated. Even Donald Feuerstein agreed that in concealing what he knew from Glauber, Gutfreund had been dishonest with the government. Although everyone thought this bizarre and out-of-character behavior, nonetheless, it had happened.

In fairness to Salomon, Gutfreund understood why the firm was expending so much effort to prove he should have been fired. He knew it was in everybody’s interest to vilify him, but the lack of proportion bothered him. At some point it should have ended, he thought.

Nonetheless, everyone, Buffett included, felt that Gutfreund was entitled to some of the money. Buffett had Sam Butler, a fellow GEICO board member and friend of Gutfreund’s, call him twice and offer $14 million. Butler whispered, “I can probably get you a little more.” Buffett would have gone to $18 million.70 But Gutfreund had been humiliated by the process. He considered Charlie Munger mean-spirited and self-righteous. He turned the offer down indignantly. The arbitrators would decide.

After months of testimony, lasting until spring 1994, the arbitrators were showing their impatience at the endless, circular, and conflicting arguments, one side professing complete innocence and the other portraying Gutfreund as an archfiend. Then, at the closing statements, Gutfreund’s lawyers showed up with a chart, raising the demand to $56.3 million by adding interest, penalties, stock appreciation, and other items.

The lawyers and people involved at Salomon had set up a betting pool as the arbitration crawled at an agonizingly slow pace toward its conclusion. How much money would the arbitrators give Gutfreund? The lowest bet was $12 million. The highest was $22 million.71

No one will ever know what factors the arbitrators weighed in their decision. When the decision was announced, they awarded Gutfreund nothing, not a dime.

50

The Lottery

Halfway Around the World • 1991–1995

Buffett’s testimony in Congress as the reformer and savior of Salomon had turned him from a rich investor into a hero. Salomon was more than a simple white hats/black hats story. The success of his unorthodox approach to scandal—embracing regulators and law enforcers instead of hunkering down—touched the yearning for nobility in many people’s hearts: the dream that honesty is rewarded; that the besmirched can be redeemed through honor. Even as the furor from the crisis died, Buffett’s star rose. Berkshire stock took off on a meteoric streak, bursting past $10,000 a share. Buffett was now worth $4.4 billion. Susie’s stock alone was worth $500 million. His original partners would now have $3.5 million for every $1,000 they had laid out in 1957.

When Buffett walked into a room, the electricity was palpable. In his presence people felt brushed by greatness. They wanted to touch him. They became dumbstruck before him, or babbled inane remarks. No matter what he said, people listened uncritically.

“I was at my best at giving financial advice when I was twenty-one years old and people weren’t listening to me. I could have gotten up there and said the most brilliant things and not very much attention would have been paid to me. And now I can say the dumbest things in the world and a fair number of people will think there’s some great hidden meaning to it or something.”

He went about surrounded by a little haze of fame. Reporters called all the time now. He was followed and asked for his autograph, and photographers started to shadow him. Zsa Zsa Gabor wrote and asked for a signed photo. As writers began working on books about Buffett, people who saw him every day—his protectors—found the frenzy incomprehensible. A woman showed up at Berkshire’s office and began bowing and scraping to him. Gladys