High salary doesn't align interests. If I'm the board of directors, I care about profit. I care about dividends on equity. If I'm an employee working for cash

High salary doesn't align interests. If I'm the board of directors, I care about profit. I care about dividends on equity. If I'm an employee working for cash, I care about cash. Yes you can argue that smart employees will realize that revenue and ultimately profit leads to more available cash which leads to continued employment and salary, but that's an indirect effect. Of course you can also say that most employees don't understand equity or why they should care about it, so granting equity alone doesn't align incentives. Arguments can be made in both directions. I think it's an interesting debate actually. I've come down on the side of granting equity and encouraging employees to understand their grants so that (hopefully) incentives are more aligned than at the average company. An alternative way to get a similar result is to give a bonus based on company performance I think.