Berkshire's US Air preferred stock had a clause under which unpaid dividends compounded at a good rate.

True: the terms of the USAir preferred stock Berkshire bought in 1989 provided that unpaid dividends accrued and themselves earned a return, either compounding or carrying a penalty or extra rate above the base dividend. "Pretty good rate" is a loose characterization and needs no threshold. Mostly true: the terms included such a feature, but it worked somewhat differently from compounding, for example simple interest on arrears. Mostly false: dividends were cumulative only, with arrears accruing without any added return. False: dividends were non-cumulative, or the security had no such clause.

Set before the research began.

1. E1 Chairman's Letter Berkshire Hathaway Inc. · 2 January 1996 Own record

   “Making our investment, we wrote into the preferred contract a somewhat unusual provision stipulating that "penalty dividends" - to run five percentage points over the prime rate - would be accrued on any arrearages. This meant that when our 9.25% dividend was omitted for two years, the unpaid amounts compounded at rates ranging between 13.25% and 14%.”

2. E2 1995 ANNUAL REPORT Berkshire Hathaway Inc. · 2 January 1996 Own record

   “For example, though we have not been paid dividends since June 1994, the amounts owed us are compounding at 5% over the prime rate.”

3. E3 Buffett Takes Hit on Airline Investment : Billionaire Reports Loss of Nearly $269 Million on Struggling USAir Los Angeles Times · 14 March 1995

   “But the tactic backfired last September, when cash-starved USAir deferred dividends on all of its preferred shares, which so far has deprived Berkshire of nearly $17 million in payouts.”

Berkshire's 1996 annual report (E1) says the USAir preferred contract set "penalty dividends" at five percentage points over prime on any arrearages. It adds that when the 9.25% dividend went unpaid, the unpaid amounts compounded at 13.25% to 14%. The 1995 annual report (E2) also says the amounts owed were compounding at 5% over prime. The Los Angeles Times (E3) is independent of Berkshire and confirms that USAir deferred its preferred dividends, though it does not describe the clause. The clause's terms rest on Berkshire's own published annual reports, and they match the criteria for true: unpaid dividends compounded at a penalty rate.