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I think the idea is that employees make most money from the profits paid to them as owners, instead of an increase in the stock price and then selling.
by t0mas88 2y ago
I think the idea is that employees make most money from the profits paid to them as owners, instead of an increase in the stock price and then selling.
- Nevermark 2y agoThere is no difference for optimizing dividends vs. stock value increases due to reinvestment, as for any other company. Employees that can sell shares at any time have the same financial interests as with any other corporation. As much reinvestment as grows value faster than the overall market is how much is best to reinvest. Distribute the rest to owners to use/invest elsewhere.
- thanksgiving 2y agoIt sounds like you just explained the opposite of what you said. If you can only get the dividends and can never sell your ownership outright, it makes sense to optimize for long term, sustainable growth and profits over short term profits. So, you don't care about stock value increase as you already own your shares. Actually, I'm thinking low share prices compared to dividends are good because it allows you to buy more and earn more. It sounds like this is a much healthier concept overall?
- s1artibartfast 2y agoThey are the same with respect to long term planning. You can take a dividend or sell stock to witdraw profits. Dividends don't have to be sustainable. There are companies that are gutted and liquidated to pay out dividends too.
- empath75 2y agoCompanies frequently make no profits. Imagine missing your rent payment because your company had a bad quarter.
- PopAlongKid 2y agoProfits and operating cash flow are two different things. Only the latter matters in terms of meeting payroll. Very few companies of any kind cut pay or lay off employees just because they "had a bad quarter." Even when there is a bad year or two (such as during coronavirus pandemic), the government will usually step in and offer generous tax credits to try to keep employees working.
- kaibee 2y agoAre... are you familiar with layoffs? Y'know, that thing companies do where they stop paying you and you don't have a job anymore?
- charles_f 2y ago> Every worker gets a salary but also a percentage of their salary in stock ownership That's in the second paragraph. I don't know what the fixation is in finding problems with paying more the people who produce what the company sells.