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> paying shareholders anything at all is in direct conflict with paying salaries to workers Paying workers anything at all is in direct conflict with generati

> paying shareholders anything at all is in direct conflict with paying salaries to workers Paying workers anything at all is in direct conflict with generating shareholder value. Key is "long term". If you want to maximize long term salaries, you must pay a decent return to equity.

xyzzyz 9y ago
No, the difference is that you need to pay salaries in order for company to continue operating. If you don't, the employees will just quit. On the other hand, there's absolutely no need to pay anything to shareholders for a company to operate, other than legal obligation. Shareholders going on strike makes absolutely no difference for the company.
- mooneater 9y ago
  Promise of investor returns is what gets the company off the ground. Remove that and how do you get early investment?
- hamilyon2 9y ago
  Technically, you can tie dividends to, say 5% of salaries and make that unchangable clause in company rules. So, legal obligation, yes.
  - walshemj 9y ago
    And how would you make a "unchangeable" rule companies can change the rules at a duly constituted meeting normally the AGM.
- beefield 9y ago
  > you need to pay salaries in order for company to continue operating. If you don't, the employees will just quit. you need to get funding in order for company to continue operating. If you don't pay a decent return for the funding, you just won't get funded. > Shareholders going on strike makes absolutely no difference for the company. This applies only to companies that do not require capital to operate/grow.
  - xyzzyz 9y ago
    No, you only pay the returns after you got funded. Except of contract enforcement in court, the investors have absolutely no way to force the company to pay up. That's what I meant by "legal obligations". Of course, if you get yourself a reputation of not returning money to investors, you'll unlikely to get funded the next time, and if the investors have no way to force the company to pay dividends, they will fund few companies in the first place. The point is, maximizing salaries paid is a terrible metric, precisely because of bad incentives it creates. > This applies only to companies that do not require capital to operate/grow. But when they require capital to grow, you aren't returning the money to investors anyway -- what would be the point of that? The investors only expect the dividends once the capital needs of the company are satisfied, and once that happens, the company no longer needs the investors.
- zAy0LfpBZLC8mAC 9y ago
  Well, except that shareholders are the ones who decide what to pay themselves, because it's their company?
  - xyzzyz 9y ago
    Not necessarily -- the board decides that. Shareholders don't have anything directly to say as to how exactly company is operated, and for good reason -- if they did, they could be held liable for the company actions.

xyzzyz 9y ago

No, the difference is that you need to pay salaries in order for company to continue operating. If you don't, the employees will just quit. On the other hand, there's absolutely no need to pay anything to shareholders for a company to operate, other than legal obligation. Shareholders going on strike makes absolutely no difference for the company.

mooneater 9y ago
Promise of investor returns is what gets the company off the ground. Remove that and how do you get early investment?
hamilyon2 9y ago
Technically, you can tie dividends to, say 5% of salaries and make that unchangable clause in company rules. So, legal obligation, yes.
- walshemj 9y ago
  And how would you make a "unchangeable" rule companies can change the rules at a duly constituted meeting normally the AGM.
beefield 9y ago
> you need to pay salaries in order for company to continue operating. If you don't, the employees will just quit. you need to get funding in order for company to continue operating. If you don't pay a decent return for the funding, you just won't get funded. > Shareholders going on strike makes absolutely no difference for the company. This applies only to companies that do not require capital to operate/grow.
- xyzzyz 9y ago
  No, you only pay the returns after you got funded. Except of contract enforcement in court, the investors have absolutely no way to force the company to pay up. That's what I meant by "legal obligations". Of course, if you get yourself a reputation of not returning money to investors, you'll unlikely to get funded the next time, and if the investors have no way to force the company to pay dividends, they will fund few companies in the first place. The point is, maximizing salaries paid is a terrible metric, precisely because of bad incentives it creates. > This applies only to companies that do not require capital to operate/grow. But when they require capital to grow, you aren't returning the money to investors anyway -- what would be the point of that? The investors only expect the dividends once the capital needs of the company are satisfied, and once that happens, the company no longer needs the investors.
zAy0LfpBZLC8mAC 9y ago
Well, except that shareholders are the ones who decide what to pay themselves, because it's their company?
- xyzzyz 9y ago
  Not necessarily -- the board decides that. Shareholders don't have anything directly to say as to how exactly company is operated, and for good reason -- if they did, they could be held liable for the company actions.