Bottom Line Up Front: Long before “skin in the game” became popular corporate jargon, Warren Buffett was already promising Berkshire Hathaway shareholders something far rarer than bold forecasts or flashy incentives: alignment. In his 1994 shareholder letter, Buffett made it explicitly clear that Berkshire’s managers would win and lose alongside shareholders, with no asymmetric compensation schemes and no side bets elsewhere. More than three decades later, after Berkshire Hathaway (BRK.B) (BRK.A) has compounded into one of the largest companies on Earth, that promise may be one of the most underappreciated reasons investors have trusted Buffett for so long.
The Details: In 1994, then-CEO Buffett was already wrestling with the idea that Berkshire’s future returns would be more modest than its past. Rather than dressing that reality up, he confronted it head-on. He told shareholders that they should expect more modest gains going forward, but that whatever the outcome, it would be shared equally.
