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Good one Adam...Can I disagree in the way the "returning capital" was interpreted? Two assumptions: (1) Capital can be returned mostly near to the end of the year, considering the same is of no further use; (2) There is no fixed income earned on idle capital available in the checking account. Now comparing apples to apples (if the total return earned on capital remains at 20%); Two outcomes: 1) If entire 100Mill allocated was used, it means a bonus of 500k...viz. 10% of (100*20%-100*15%); (2) If only 90Mil used and balance 10Mil returned...bonus should be 300k ! ....viz.. 10% of (90*20%-100*15%). While Buffett allocated 100 Mil assuming the same would earn minimum 15% return (benchmark), the manager used only 90 Mil and returned the balance 10Mil (Though the manager is rewarded for good performance on using 90Mil, he will be slightly penalized for excess budgeting and keeping 10Mil capital idle). In your calculation, you assumed 22.22% return on 90Mil to arrive at the same 20Mil return on capital and considered 15% benchmark return on 90Mil to arrive at 650k bonus! (While Buffett is expecting his entire money, 100Mil should work for him at 15%)

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