At the end of the day, the impact of your annual stakeholder letter does not hinge on a P/E ratio or book value. “Effective shareholder letters clearly articulate the company’s strategy and offer specifics about the types of benchmarks the company expects to achieve in a candid, open, and realistic manner,” writes Cheryl Soltis Martel in NACD Directorship.

The archetype for this frank and effective communication, notes Jeffrey M. Cunningham in Directorship, comes from the desk of Berkshire Hathaway CEO Warren Buffett. Cunningham highlights “8 rules of a great annual letter,” featuring illustrative examples from Buffett’s 2012 missive.

The three rules below are pertinent not only to CEOs of publically traded firms, but to all executives tasked with stakeholder communication. Which is all of us all of the time, isn’t it?

Rule 1. Your stakeholders have forgotten all about your business model. Remind them.

Example: Buffett offers a primer on what it is, exactly, that Berkshire Hathaway’s insurance holdings do. “Our insurance operations continued their delivery of costless capital that funds a myriad of other opportunities. This business produces 'float'--money that doesn’t belong to us but that we get to invest for Berkshire’s benefit. And if we pay out less in losses and expenses than we receive in premiums, we additionally earn an underwriting profit, meaning the float costs us less than nothing. Though we are sure to have underwriting losses from time to time, we’ve now had nine consecutive years of underwriting profits, totaling about $17 billion. Over the same nine years, our float increased from $41 billion to its current record of $70 billion. Insurance has been good to us.”

Rule 2. If there’s bad news, hit them over the head with it. This way your stakeholders won’t have to take notes.

Example: Buffett takes personal responsibility for two decisions that hurt the company in the short term. “I’ve run out of good news. Here are some developments that hurt us during 2011: A few years back, I spent about $2 billion buying several bond issues of Energy Future Holdings, an electric utility operation serving portions of Texas. That was a mistake--a big mistake. . . . Last year, I told you that ‘a housing recovery will probably begin within a year or so.’ I was dead wrong.”

Rule 3: Talk about your team from a stakeholder perspective and show why they care as much as the CEO.

Example: Buffett explains why his team’s dedication matters to the bottom line--and much more--from a shareholder’s perspective. “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 believe their mind-set to be as shareholder-oriented as can be found in the universe of large publicly owned companies. Most have no financial need to work; the joy of hitting business ‘home runs’ means as much to them as their paycheck.”

This article originally appeared at The Build Network.