3 ms·
If employees have shares, they are shareholders. At any rate, it is neglect of fiduciary duty if you dilute shares without simultaneously producing enough value
by christophilus 7y ago
If employees have shares, they are shareholders. At any rate, it is neglect of fiduciary duty if you dilute shares without simultaneously producing enough value that the share price will increase proportionally.
- otterley 7y agoDo you have a legal citation for that?
- mlyle 7y agoHis statement is an overreach, but the point is: you can't just dilute a given shareholder class for the benefit of others willy-nilly.
- otterley 7y agoOverreach with respect to legal conclusions is par for the course at HN, it seems...
- rficcaglia 7y agoYou can with lawyers. Just saw it happen first hand. It is amazing what cap table engineering can be done with a few 100K in lawyer fees and a devious board member or two.
- ohazi 7y agoThe company, any reasonably wealthy executives, and the investors all have lawyers. The rank and file largely do not. That's the only reason this works. It would never fly if challenged, but it never gets challenged.
- rficcaglia 7y agoTrue. But even experienced execs and investors know that lawsuits require time, arbitration, and often don’t go how you would expect. All the while eating up money that should go to shareholders. I’m agreeing that employees get screwed more often than not, I’m also saying smaller investors get screwed more often than not.
- october_sky 7y agoYou didn't address the fact there are different classes of shares, which the person you're responding to pointed out.