skin in the game

Skin in the Game

Informal; a situation in which an executive in a publicly-traded company uses his/her own money to buy stock in that company. It is fairly common for an executive to receive stock as compensation or to exercise stock options to buy stock at a discount. It is less common for an executive to risk his/her own money in the company for which he/she works as if he/she were an outside investor. Putting skin in the game is seen as a sign of good faith or a show of confidence in the future of the company. The term was coined by Warren Buffett.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

skin in the game

An expression reputed to have been coined by investor Warren Buffett,referring to a situation in which high-ranking insiders use their own money to buy stock in the company they are running.Most often,it refers to a lender aversion to 100 percent financing,even if the property is worth well more than the loan,because the lender wants the owner or developer to “have some skin in the game”and some equity to lose if the deal goes bad.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.