The Joy of Hitting Business “Home Runs”
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway (“Berkshire”), or any other entity referenced. Edina Realty is a subsidiary of Berkshire.]
When Warren Buffett buys a company, trust me, the principals and senior managers all become independently wealthy (in fact, most 
probably were well before Mr. Buffett came calling**).
So, why do the managers — who typically stay on to run things — hang around?
The answer is buried at the end of the 2016 Berkshire Hathaway Shareholder Letter, penned (as always) by Mr. Buffett:
“For good reason, I regularly extol the accomplishments of our operating managers. They are truly All-Stars who run their businesses as if they were the only asset owned by their families. I also believe the mindset of our managers to be as shareholder-oriented as can be found in the universe of large publicly-owned companies. Most of our managers have no financial need to work. The joy of hitting business “home runs” means as much to them as their paycheck.”
–2016 Shareholder Letter, p. 28 (2/25/2017).
So, there you have it: their incentive isn’t greed or power or some other ego-driven sentiment, it’s deriving joy from what they do.
You’ve got to believe the same describes the 86 year-old Mr. Buffett, who — with a reported net worth of $79 billion — most certainly doesn’t need another paycheck, either.
**Historically, most of Berkshire’s acquisitions have been initiated by the selling company, with very little involvement by third parties like Wall Street investment banks. Whenever feasible, Mr. Buffett prefers to use cash (vs. dilutive stock).
