Berkshire Hathaway 2010 Annual Report Download - page 106

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Memo
To: Berkshire Hathaway Managers (“The All-Stars”)
cc: Berkshire Directors
From: Warren E. Buffett
Date: July 26, 2010
This is my biennial letter to reemphasize Berkshire’s top priority and to get your help on
succession planning (yours, not mine!).
The priority is that all of us continue to zealously guard Berkshire’s reputation. We can’t be
perfect but we can try to be. As I’ve said in these memos for more than 25 years: “We can afford to lose
money – even a lot of money. But we can’t afford to lose reputation – even a shred of reputation.” We
must continue to measure every act against not only what is legal but also what we would be happy to have
written about on the front page of a national newspaper in an article written by an unfriendly but intelligent
reporter.
Sometimes your associates will say “Everybody else is doing it.” This rationale is almost always
a bad one if it is the main justification for a business action. It is totally unacceptable when evaluating a
moral decision. Whenever somebody offers that phrase as a rationale, in effect they are saying that they
can’t come up with a good reason. If anyone gives this explanation, tell them to try using it with a reporter
or a judge and see how far it gets them.
If you see anything whose propriety or legality causes you to hesitate, be sure to give me a call.
However, it’s very likely that if a given course of action evokes such hesitation, it’s too close to the line
and should be abandoned. There’s plenty of money to be made in the center of the court. If it’s
questionable whether some action is close to the line, just assume it is outside and forget it.
As a corollary, let me know promptly if there’s any significant bad news. I can handle bad news
but I don’t like to deal with it after it has festered for awhile. A reluctance to face up immediately to bad
news is what turned a problem at Salomon from one that could have easily been disposed of into one that
almost caused the demise of a firm with 8,000 employees.
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