1996: Do the class B shares penalize the class A shareholders?

AUDIENCE MEMBER: Mark Findidi (PH) from Connecticut. I’ll apologize ahead. This isn’t meant to be an impudent question or — in any way, shape, or form.

Do you think that the issuance of the B, in any way, might — in an effort to protect the folks who might be out there suckered in by the trust, if you will — in any way penalizes the A shareholders, either, one — or might penalize them — either, one, financially or, two, philosophically in the BRK experience?

I don’t mean that in any kind of elitist fashion, because I don’t think you’ve ever propagated that. BRK doesn’t propagate that. But clearly, there’s a room full of people — or rooms full of people — who have made a commitment financially to show that their philosophy is with you. Does that get diminished?

The other part of the question is the trusts, as you portrayed them, didn’t sound terribly attractive. In a longer term, would they, perhaps, have ultimately failed as folks realize that they hadn’t gotten into what they thought?

WARREN BUFFETT: Well, they might’ve. But I think the rub off would’ve been on us rather than the promoters of the trust — might’ve been on the promoters, too. But in terms of the failure of the trust, I don’t mean failure in an absolute sense, but in terms of disappointing their investors.

I really think if tens of thousands or hundreds of thousands of people had come into something that was sold as being an all-Berkshire-type trust, if people came away disappointed in some years, I think they would tend to project that disappointment upon Berkshire fully as much as the promoter who sold the trust, who they might not even be able to find at that time.

The first question, you know, this — I don’t think — we wouldn’t be doing this if we thought it would hurt present shareholders, we — as much as we might detest something else that was going on. And we designed it so it — we felt that it wouldn’t hurt present shareholders.

In terms of them having a philosophy — the new shareholders having a philosophy similar to the present ones — we’ve tried to filter those out coming in.

But I intend, after the offering, to send out a booklet, you know, kind of like freshmen at college, you know, orientation, greetings to Siwash U.

And we’ll send it to everybody, new shareholders and the old shareholders, explaining our philosophy, just as an orientation course on the company. And we’ll get that out, probably, in a month or so after the offering settles down.

I don’t see any reason that — you know, Berkshire has evolved over a long period of time. We had 12 shareholders at the annual meeting 15 years ago. And it — we seem to be able to retain the same class and group of shareholders, in terms of people who really understand the business. It’s a different group than you find at other companies.

And I think we can — as long as we’ve had this filter in effect, operating as new people join us, I think we can keep it.

Charlie?

CHARLIE MUNGER: Yeah. If the offering went wild and you issued 3 percent of the company, new, you’re also taking in a billion-odd dollars. It is a — it’s a non-event for us. (Laughter)

WARREN BUFFETT: He’s very excitable. Don’t say anything to him. (Laughter)