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Limited liquidity- if you can only sell shares to employees, you have to find other employees to buy your shares who have the money to do so, and you may have t

Limited liquidity- if you can only sell shares to employees, you have to find other employees to buy your shares who have the money to do so, and you may have to accept a much lower price than some one on the open market might pay. Decision making- depending on the companies governance model, it may be hard to get everyone onboard to make large investments in new areas. If the company/employees do make bad decisions, it can result in employees not just losing their jobs, but also a substantial portion of their saving, which may be tied up in the company. This is the same reason why the common advice is to not tie up too much of your savings in your companies own stock (see Enron employees, for example). I am sure there are many more- but there are also a lot of advantages, as such, I am a big fan of both worker owned businesses and consumers cooperatives. I wish both were far more common.

samatman 3y ago
> if you can only sell shares to employees, you have to find other employees to buy your shares who have the money to do so, and you may have to accept a much lower price than some one on the open market might pay. If you can only sell to fellow employees, that's priced in to the value of the stock. There is no open market price, so it can't really be higher or lower except hypothetically. This isn't a nitpick, it means that the price you get for the stock is more based on the dividends it bears, since market speculation plays no role. I don't think it's legal to force people to sell stock when they're no longer associated with a company, so "employee and former employee owned" is probably more accurate.
- bruce511 3y ago
  Stocks have 3 values; A) tradeable on a Stock exchange. (Capital value) B) income from dividends (income value) C) voting rights (direction value) If the company is not publically traded, then Capital value more or less disappears (can be assumed to be 0). Income value is almost always the primary use-case for this kind of share. Usually "employee held shares" have limited or restricted voting rights. (An extreme short-term position might be "liquidate the business and divide the spoils", which might be popular if the majority is nearing retirement, but is clearly not good for business survival.) These shares should in no way ever be considered as part of your retirement plan. Period.

samatman 3y ago

> if you can only sell shares to employees, you have to find other employees to buy your shares who have the money to do so, and you may have to accept a much lower price than some one on the open market might pay. If you can only sell to fellow employees, that's priced in to the value of the stock. There is no open market price, so it can't really be higher or lower except hypothetically. This isn't a nitpick, it means that the price you get for the stock is more based on the dividends it bears, since market speculation plays no role. I don't think it's legal to force people to sell stock when they're no longer associated with a company, so "employee and former employee owned" is probably more accurate.

bruce511 3y ago
Stocks have 3 values; A) tradeable on a Stock exchange. (Capital value) B) income from dividends (income value) C) voting rights (direction value) If the company is not publically traded, then Capital value more or less disappears (can be assumed to be 0). Income value is almost always the primary use-case for this kind of share. Usually "employee held shares" have limited or restricted voting rights. (An extreme short-term position might be "liquidate the business and divide the spoils", which might be popular if the majority is nearing retirement, but is clearly not good for business survival.) These shares should in no way ever be considered as part of your retirement plan. Period.