Now that’s how to write a letter


We’ve probably all scratched our heads from time to time over some of the fuzzy language that tends to permeate shareholder letters. When you stumble over a gem like this one, you’re likely to wonder if it’s intended as good or bad news:

“We also have made significant progress extracting value from other assets that are no longer core to our operations, but are still outstanding businesses on their own.”

And while it’s great to gain new customers and hold onto the old ones, does it make it any better to say it like this?

“We are encouraged by the strength in acquisition that we are seeing, coupled with the continued improvements in retention among our domestic members.”

Then there are the difficult moments when a board or a CEO has to deliver unequivocally bad news. Woe to those who choose intentional ambiguity in an effort not to spook shareholders. As Best Buy might now agree, attempting to pass off the removal of a CEO as, essentially, no big deal tends to raise more questions than it answers:

MINNEAPOLIS--(BUSINESS WIRE)--Apr. 10, 2012-- The board of directors of Best Buy Co., Inc. (NYSE:BBY) today announced that Brian Dunn has resigned as chief executive officer and director. There were no disagreements between Mr. Dunn and the company on any matter relating to operations, financial controls, policies or procedures. There was mutual agreement that it was time for new leadership to address the challenges that face the company.

Best Buy evidently felt compelled to clarify matters the very next day:

Certain issues were brought to the board’s attention regarding Mr. Dunn’s personal conduct, unrelated to the company’s operations or financial controls, and an audit committee investigation was initiated,” Claire Koeneman, a Best Buy spokeswoman who works for H+K Strategies, said yesterday in an e-mailed statement. “Prior to the completion of the investigation, Mr. Dunn chose to resign.”

I was about to ding Ms. Koeneman for the heavy use of passive voice, when I realized it was quite masterful, instead; against the murky passive clauses of the first sentence, the unmitigated prowess of that final, active statement virtually shouts, “Mr. Dunn chose to resign.”

When compared to the usual fare of shareholder letters, Warren Buffett’s letter on April 17 stands alone for its clarity and grace. Although praising Warren Buffett for being plainspoken is sort of old hat, this letter, in which the subject of the bad news is Mr. Buffett himself, is worth a special nod:

To the Shareholders of Berkshire Hathaway:

This is to let you know that I have been diagnosed with stage I prostate cancer. The good news is that I’ve been told by my doctors that my condition is not remotely life-threatening or even debilitating in any meaningful way. I received my diagnosis last Wednesday. I then had a CAT scan and a bone scan on Thursday, followed by an MRI today. These tests showed no incidence of cancer elsewhere in my body.

My doctors and I have decided on a two-month treatment of daily radiation to begin in mid-July. This regimen will restrict my travel during that period, but will not otherwise change my daily routine.

I feel great – as if I were in my normal excellent health – and my energy level is 100 percent. I discovered the cancer because my PSA level (an indicator my doctors had regularly checked for many years) recently jumped beyond its normal elevation and a biopsy seemed warranted.

I will let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off.

Warren E. Buffett

Forthright. Accurate. Conversational. Human.

We wish you well with your treatment, Mr. Buffett.

Maria Boos is a strategy director, Simplification, for the Siegel+Gale New York office.


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