What CEO wouldn't want to include himself in the same circles as Warren Buffett? MetLife's (NYSE: MET), apparently. This major insurance company has decided to exclude fellow heavyweight insurer Berkshire Hathaway (NYSE: BRK-A, BRK-B) among the peers to which it compares itself when setting executive compensation levels.

The folks at footnoted.com discovered this in a footnote (of course) of a MetLife filing. MetLife apparently likes to look at peers in the S&P 500 when determining compensation. But the recent addition of Berkshire Hathaway to the index threw a spanner in those works.

According to the footnoted article, MetLife Chairman and CEO C. Robert Henrikson took home $11.6 million in 2009, while Berkshire's Buffett has collected $100,000 from his company annually in recent years, along with $75,000 in director's fees from Washington Post. A number like $100,000 or even $175,000 can really bring down the average, making executives earning many millions look, well, kind of greedy.

Wriggling out
Thus, MetLife explained that, given "the diversity of its business outside of insurance and financial services," Berkshire Hathaway isn't really a peer. Sure, Berkshire has many businesses under its roof, including candy, flight training, bricks, jewelry, and furniture. But its insurance division has long been a huge part of the company.

According to footnoted.com, insurance recently generated about a third of the company's income; last year, before Berkshire's Burlington Northern purchase, the insurance-income figure was 62%. According to Bloomberg data, Berkshire has a 31% weighting in the S&P 500 Insurance Index, versus 9% for MetLife. Yet it's not a competitor?

Imagine executives at major retailers choosing to exclude Costco (Nasdaq: COST) from peer-group comparisons. Like Buffett, Costco CEO Jim Sinegal is famous for receiving a relatively modest salary of $350,000 -- while paying employees more than their counterparts at other retailers. In the recently ended fiscal year, his bonus, stock, and options gave him a total take of $3.5 million, but that's still small potatoes next to many CEOs.

The lapdog problem
The problem of CEO overcompensation isn't going anywhere, alas. Buffett has explained that the whole system is rigged, with CEOs hiring compensation consultants who point out how much the CEOs' peers are making to compensation committees peopled with fellow bigwigs from other companies. It's not a surprise that Buffett is rarely appointed to compensation committees at the companies he serves as a director.

It all makes me shake my head and long for a better way. If a board of directors wanted to cut costs significantly, it could put the CEO job out for bid. I'm sure plenty of qualified people would love to do it for peanuts. In the meantime, Fools, make sure you vote against outlandish packages whenever your investments' proxy statements give you the opportunity.

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Longtime Fool contributor Selena Maranjian owns shares of Costco and Berkshire Hathaway. The Fool owns shares of Berkshire Hathaway and Costco, which are both Motley Fool Inside Value  and Motley Fool Stock Advisor recommendations. Try any of our investing newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is Fools writing for Fools.