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Every company should be owned by its employees

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Re: Every company should be owned by its employees

#111

Post by ossobuco »

eru wrote: post #99
ossobuco wrote: post #54

Earlier quoted context omitted.

How does that work when 60% of Americans are living paycheck to paycheck? When you're not sure if you'll manage to pay the electricity bills to keep your fridge turned on, is your first thought going to be "let's invest in the market!"?

Interpreted charitably, you are making an argument that people's comp should be higher. But I don't see any argument that paying that higher comp in the form of shares instead of in the form of cash is any better? (Unless you want to imply that people are too dumb and need to be protected from themselves, and that why we need to give them more stocks instead of more cash? Or something else?)

> Interpreted charitably

No need for your charity, thanks. I'm simply making the argument that you must live in a bubble if you think that enough people have the excess liquidity and market knowledge for this to be an applicable solution to the general population.

> Unless you want to imply that people are too dumb and need to be protected from themselves

Not being wise in the markets != being dumb.

Protected from themselves? No, protected from speculators and exploiters.

Re: Every company should be owned by its employees

#112

Post by graemep »

roenxi wrote: post #89
xmprt wrote: post #18

I think the most surprising thing about trends in modern executive class pay is just how steep it is compared to the median employee. It makes me wonder why shareholders outside the company are happy with it. For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being p…

I doubt they are happy as much as disinterested. The economy has been heavily financialised, interest rates have been at 0% [0] and a big chunk of economic activity is government spending. Shareholders don't appear to be worried about how the company actually runs in the details. What matters is that the CEO is positioning them to tap in to the money printing and borrowing game. IE, the wages suggest workers don't re…

I was going to say this. In addition to what you say a lot of shareholders are in i for the short term. They are interested in what the share price will do in the short term.

Directors remuneration mostly decided by other directors (and just approved by shareholders who are not bothered), who tend to take the view that it is worth paying directors very highly.

Its something that has got worse, but its not new. As GK Galbraith said "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself."

Re: Every company should be owned by its employees

#113

Post by cess11 »

klipt wrote: post #95
cess11 wrote: post #77

Earlier quoted context omitted.

Sure, if it allows owners to stay in control and keep profiting from the people that perform the labour in the organisation. It's someone you can pin board and shareholder decisions on, as well as changes in market and accidents, that just goes away and lets some other people keep their power and profits instead of being accountable for their mistakes or lack of strategic performance.

But if it were just that, plenty of people would be willing to take the blame for less money. I think the problem is you have to hire someone highly qualified and with relevant experience to at least show you're doing due diligence, and those people aren't cheap.

It has to be someone who looks somehow impressive, it can't just be a random homeless person doing it for a meal, that would look like the enterprise is doing something criminal.

Pay plays a part in that, it signals that the person is extraordinarily competent and all around great and important.

In large corporations CEO:s aren't very important, it's just one person who mainly collects and structures information from people closer to the work and makes public appearances on behalf of the corporation and does paper shuffling required by the state and so on. It's not rocket surgery. Using this person to protect the reputation and image of shareholders and the board as well is a 'no-brainer' decision to make if your interests are well served by it.

Re: Every company should be owned by its employees

#114

Post by eru »

sgammon wrote: post #71

Equity is zero-sum. Once you hand it out, it's gone. You can create more, but it will dilute everyone else. Not a very good arrangement for something that should create value over a long period of time.

You know that stock buybacks are a thing?

In any case, things are a bit more complicated.

If the company manages to sell equity at a premium to current market prices, existing shareholders benefit, they don't get diluted in any absolute sense.

Conversely, if the company does stock buybacks at a premium, continuing shareholders suffer.

Re: Every company should be owned by its employees

#115

Post by AnthonyMouse »

glandium wrote: post #33
dan-robertson wrote: post #22

Earlier quoted context omitted.

If the company is public, one can simulate the scheme by buying their stock, I guess. Taxes may be different and phrased like that, it seems weirdly risky to buy more of the thing you’re most exposed to (if the company lays you off, the stock may be down too).

> if the company lays you off, the stock may be down too Don't most layoffs make the stock go up?

Layoffs generally imply the company is contracting rather than expanding.

Re: Every company should be owned by its employees

#116

Post by dheera »

lnsru wrote: post #78
RicoElectrico wrote: post #53

Earlier quoted context omitted.

No, the risk for regular employee is higher due to downside vs upside. Once you cross some wealth threshold, it's not possible to lose everything (e.g. become homeless) unless you do something deliberately stupid like gambling or drugs. There's always plan B if you're rich. Like, rent out property or something.

Thanks for writing this. Owning a place to live and couple rental properties makes one economically independent. Leaving a toxic workplace means loosing fancy car and canceling expensive vacation. Loosing job before that wealth threshold means homelessness and poverty.

> Leaving a toxic workplace means loosing fancy car and canceling expensive vacation.

> Loosing job before that wealth threshold means homelessness and poverty.

No, it doesn't. Maybe don't borrow money and buy a fancy car and vacations you can't afford? Buy a normal car with cash and go on normal middle-class vacations?

If you work in an mid-level engineer capacity at a FAANG or Nvidia in the Bay Area you can easily live on 1/3 of your take-home compensation (that's including a normal car, a couple economy-class vacations a year, and a modest apartment) and invest the rest in index funds. Within a few years of working, you would have banked enough to have a decade worth of expenses saved before you'll be homeless, and I'm sure you can find another job in that decade.

I work at a big tech company, my (very normal) car cost me 1/10 of my annual take-home salary, I've never flown anything but economy class, and I save 60-75% of my take home pay and invest it. I can't afford rental properties or any of that, but I do have enough funds to last me several years at my current lifestyle.

Back when I was at startups (including co-founding one), I was never able to save more than a few months' worth of emergency fund, and that was not good for my mental health. That's one of the reason I joined a big tech company for now -- to de-risk myself financially.

Startups are financially FAR higher risk. You'll get 1/4 the pay that Nvidia gives you, the equity may end up being worth $0, and if it does end up being worth $0, you'll have missed out on the opportunity cost of being hired at any of the FAANG companies for whatever time you spent there.

I'm not discouraging anyone from doing a startup, but it IS higher financial risk in every way.

Re: Every company should be owned by its employees

#117

Post by croisillon »

b800h wrote: post #102
croisillon wrote: post #67

Earlier quoted context omitted.

they wrote "same old russian feudalism" and "still not emancipated citizens" and you non-sequitur it with "if it was so great"..?

Fair point - my argument is that it added a load of additional garbage on top. It clearly didn't achieve anything substantially positive, and it hasn't done anywhere it's been tried.

i agree with that and i believe the person you answered to agrees as well

Re: Every company should be owned by its employees

#118

Post by Aissen »

dash2 wrote: post #94

Employee stock options are not a new idea, obviously. If the story is "every company should offer stock options to its employees", then sure, that's often a good business plan. The reason not every company does it to all its employees is probably that for those employees, it wouldn't affect incentives much and it would make payment subject to the vagaries of the stock market. Your barista at Starbucks is not going to…

> Your barista at Starbucks is not going to increase the stock price no matter how well he fills your order

But 400k barista all doing it well might.

Re: Every company should be owned by its employees

#119

Post by b800h »

croisillon wrote: post #117
b800h wrote: post #102

Earlier quoted context omitted.

Fair point - my argument is that it added a load of additional garbage on top. It clearly didn't achieve anything substantially positive, and it hasn't done anywhere it's been tried.

i agree with that and i believe the person you answered to agrees as well

I'm not so sure. Sounded like apologism to me, which is dangerous, frankly.
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