2 ms·

I was wondering about a similar, but different mechanism. There's a pool of shares that are effectively rented for free to employees, and part of their pay is t

I was wondering about a similar, but different mechanism. There's a pool of shares that are effectively rented for free to employees, and part of their pay is the dividend they get. When you join, you get them for free (maybe there's some vesting schedule), when you leave they go away, not as a sale but just for free again. Soo... It's not like you're always inflating your share base with options. Just part of what people are paid is basically same as shareholders. This isn't some "align with shareholders" bullshit, rather I wonder if it somewhat decreased the myopic perspective of an employee. They get paid off of the success of the whole company, they have an interest in prudent cost management, and so on. They get to vote on issues affecting the whole firm, too - collectively maybe they are 5-10% or whatnot, not lots but enough that they have a voice. Otherwise, there is a prevalent, and sadly reasonable perspective of extreme cynicism towards an employer. The employer always says how we're all in it together, teamwork etc. but really, every employee is best served by entirely optimizing only their own utility. But surely this can't be optimal at the society level.

chii 2y ago
> every employee is best served by entirely optimizing only their own utility. but this would still remain the case in the scheme proposed. Even suppose those employee-class shares get a voting right, they would want to maximize their own benefits: such as higher dividend payout. As for why - imagine if there's a decision between long term investment in plant & equipment, vs paying out dividend today. An employee who might not wish to stay will vote to get the dividend, as their "share" is going to be gone by the time the long term investment pays off. So the only way to align employee and owners, is to have employees own regular shares.
TrueSlacker0 2y ago
That's a profit share plan. Something implemented like as xx% (usually 20%) of net profit is dispersed to staff each quarter. You don't buy into shares or anything. You don't get them when you leave.

chii 2y ago

> every employee is best served by entirely optimizing only their own utility. but this would still remain the case in the scheme proposed. Even suppose those employee-class shares get a voting right, they would want to maximize their own benefits: such as higher dividend payout. As for why - imagine if there's a decision between long term investment in plant & equipment, vs paying out dividend today. An employee who might not wish to stay will vote to get the dividend, as their "share" is going to be gone by the time the long term investment pays off. So the only way to align employee and owners, is to have employees own regular shares.

TrueSlacker0 2y ago

That's a profit share plan. Something implemented like as xx% (usually 20%) of net profit is dispersed to staff each quarter. You don't buy into shares or anything. You don't get them when you leave.