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Old 09-22-2019, 08:58 PM
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Should corporations pay a mandatory dividend to employees?


I remember reading once that corporations located in a South American country (I think it was Chile, but I'm not sure) were mandated by law to pay out dividends to shareholders. I can't remember the amount, but it was a percentage of total profits.

So I was thinking about that again tonight, and wondering, what if it were mandatory to pay a similar dividend to workers? If we make it high enough, it could potentially put a serious dent in wealth inequality. It actually seems quite fair to me, as the only reason the company makes a profit in the first place is because of its employees.

Is it a wealth transfer? Absolutely, and I think that would be a good thing overall, and may very well lift a lot of working class people out of poverty. The people who are actually creating that wealth should get a fair share of what they create, and not merely what the owners of the company feel like giving them. I think, 30 years after President Reagan left office, we can safely conclude that trickle down economics was a huge flop, so it's high time to try something else, something that doesn't rely on the generosity of those whose modus operandi is to hoard wealth.

What if, for example, the dividend paid to employees had to be just 10% of what was paid out to shareholders? Take CocaCola, for example. It looks like they paid out over 6.6 billion dollars in dividends last year (cite). From what I can find, they have about 62,000 employees. So each employee, if they got just 10% of the dividends, would be looking at a $10,645 payout. That amount is probably chump change for the CEO, but it is a massive increase in the standard of living for the folks on the lower rungs of the ladder (or the lower floors of the multi-floor outhouse).

What would be the repercussions, society wide, if every corporation in the USA, or that wanted to do any business whatsoever within the USA, were required by law to pay such a dividend to its employees?

Last edited by CoastalMaineiac; 09-22-2019 at 08:58 PM.
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Old 09-22-2019, 09:11 PM
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Disclaimer: I have founded four firms in my lifetime - the most recent one we just filed the incorporation paperwork on Friday - and I've always set aside profitability bonuses for my employees. In the current one, 10% of quarterly profits will be shared with all staff as a bonus.

Now, as you share it, you're postulating that publicly held corporations share with employees. That disallows companies that don't issue shares. You may think that's smaller firms but some very large ones are Publix, Albertsons, Ernst & Young and others.

So what I think you're shooting for is some aspect of a firm's profits being shared with employees. The traditional solution in the United States - sadly losing ground over the last few decades - is unionization. Union contracts can stipulate such. Other countries do it differently, of course. You may find a solution there. Germany, for instance, has two boards per company and the supervisory one must be 50% employee representatives.

But, fundamentally, I don't disagree. It's clear to me - others may disagree - that the drive for short term dividends and growth provide self-destructive incentives for senior management in the United States and a change in focus is both needed and coming lest the entire system collapse in the medium term.
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Old 09-22-2019, 09:21 PM
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What would stop these corporations from simply reducing employee wages as a result? The workers might not be taking home any more additional take-home pay when all is figured in.
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Old 09-22-2019, 09:53 PM
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I would immediately cease all dividends.
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Old 09-22-2019, 10:48 PM
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What would stop these corporations from simply reducing employee wages as a result? The workers might not be taking home any more additional take-home pay when all is figured in.
The minimum wage provides a floor.

~Max
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Old 09-22-2019, 10:48 PM
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No.

However, if I ever form a company Iíd have some form of profit sharing. But thatís my choice.
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Old 09-22-2019, 10:58 PM
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Assuming the new scheme is not funded by employee pay cuts, I have a feeling that the proposed change would decimate charity and retirement portfolios. Would someone more familiar with that field care to look into the effect of a sudden -10% cut to shareholder dividends?

I don't suppose most businesses have a 10% profit margin (after paying shareholders) they are willing to part with and passing costs to consumers just means 10% inflation. The money has to come from somewhere.

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Old 09-23-2019, 06:16 AM
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In an environment where people negotiate their own pay, a Profit Sharing requirement becomes a nearly zero sum game, but where employees share the risk of the business owner.

Salaries will fall to a level where Salary + PS equals (roughly) current salaries. However, the PS piece is variable, and adds risk to the employee's earnings. A risk, mind you, that they have little to no control over.
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Old 09-23-2019, 06:49 AM
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I would immediately cease all dividends.
Well, congratulations. You just crashed the value of Coca-Cola. Given that the stock is currently overvalued (PE of 32.97 overnight) ending the dividend in that way would cut at least 20% off the stock's value.

At that point, the board would be screaming because the sell off would get some momentum. Good luck managing that.
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Old 09-23-2019, 07:03 AM
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The most likely outcome, at least for the behemoths like Coca Cola, is that the corporations would seek to maintain their shareholder dividends and accept the employee dividends as an additional cost. They would then seek to alleviate this cost by reducing expenses elsewhere. Any current employee profit sharing programs would surely take a hit. Employee pay might not take an immediate hit, but raises and starting wages of future workers would be curtailed. If achievable cost savings weren’t enough to pay for the employee dividend, then the rest would probably be taken out of cash reserves. If that happened, there would eventually be price rises to pay for the employee dividend by finding revised profit points for the corporations’ products.

Ten percent of the dividend would not be a huge hit for a company like Coca Cola. My concern would be that that 10% rate would be used as a wedge for a socialistic takeover of corporate wealth. The surrounding community is also a corporate stakeholder right? Shouldn’t corporations be required to also pay a dividend to a corporate community fund? If a 10% employee dividend has good results, wouldn’t 20% be even better? Why should the corporations’ owners get a greater share than the employees or the community? Wouldn’t a three-way split be fairer for everyone? A minor change to redirect a relatively low percentage of corporate profits towards employees might well be a good idea. Any major change will downwardly impact stock prices and investment, which will then hurt anyone who has pension or a retirement investment fund.

Also, don’t assume that everyone agrees with you about Reagan’s economic policies.
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Old 09-23-2019, 07:08 AM
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I'd prefer majority (if not full) employee ownership of most companies.
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Old 09-23-2019, 07:13 AM
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While your concept sounds intuitively correct the fundamental flaw in your logic is:
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the only reason the company makes a profit in the first place is because of its employees.
Employees are only one small part of profit. There are many many factors that directly influence profit that are outside of the control of most employees. Some big examples include competitor's actions, government regulations, raw material prices, even things like fuel prices, rent etc.

As noted by Max S. the objective of any "bonus" program should be to provide an incentive for employees to at least meet or exceed their personal performance objectives, it shouldn't be "found money". Employee personal performance goals should be linked back to what they personally do to help the company achieve its objectives.
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Old 09-23-2019, 07:20 AM
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Corporations typically compensate employees, in times or high profitability, with wage increases and bonuses. It isn't a perfect system, but it's been working well enough so far. Dividends are paid to shareholders in times of high profitability in return for SH's providing capital to the company which it uses to do business. I don't see the need to mix up these two systems.

Or is it you just feel that employees deserve more than they are currently getting as compared to the shareholders? Show me the math.
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Old 09-23-2019, 07:43 AM
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What happens if the company loses money, for reals or on paper?
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Old 09-23-2019, 08:17 AM
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I would presume, as now, that the Board would be able to cut or eliminate the dividend.

As in understand the proposal, 10% of the companyís dividend is paid to employees. So if the board eliminates the dividend employees get nothing as well.

Iíd also challenge the earlier statement that companies use dividends to reward shareholders in times of profit. There are, in fact, many reasons for a dividend to be declared. A company may use it to defend its share price during hard times. It may use it to disburse excess cash from a one-time event.

Contraiwise, Apple needed to be dragged kicking and screaming - and almost lawsuited - into declaring a dividend when it was one of the most profitable companies on Earth and absolutely flush with cash.
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Old 09-23-2019, 08:24 AM
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What happens if the company loses money, for reals or on paper?
That's what I was wondering. I'm sure employees would love it if their employer was forced to give them a percentage of the profit. I can't imagine too many of them would be happy during slower times when they got a bill instead.

To me, this reads as the employer giving the employees money from their pocket (the profit) during good times. During bad times the employer is helping float the company with money out of their pocket.

What incentive is there for employers to get on board with a system like this verses just moving more of their operations to other countries?
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Old 09-23-2019, 08:45 AM
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I can't imagine too many of them would be happy during slower times when they got a bill instead.
You think that doesn't happen?

IBM had a big furlough of workers a couple of years before I quit working for them (2013). That was after announcing an increase in dividend and billions for share buybacks. When a company does poorly, workers get pink slips, fewer hours, the whole gamut of "fuck you's" that a company can give to their workers. Pretending that employees are somehow insulated from a company's failures because they get paid X dollars for Y hours worked is a nonsense point of view. As much as you can argue that it's true, it isn't true, and never in the history of business has it ever been true.

Not to mention, as a person who has owned stock, I've never been presented with a bill. Not ever. Not once.
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Old 09-23-2019, 09:35 AM
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Well, in certain companies it can happen. Some partnerships, for instance. But it’s rare. And shareholders can be wiped out via bankruptcy.

Still, the focus on dividends is where this gets interesting as they are not directly tied to profitability. Ditto share issuances - which cost employers no direct cash - in lieu of cash dividends. Both provide a stronger incentive for employees to want the company to thrive.
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Old 09-23-2019, 09:45 AM
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Like so many "progressive" ideas, this proposal is very generous with other people's money.
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Old 09-23-2019, 10:59 AM
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Well, in certain companies it can happen. Some partnerships, for instance. But itís rare. And shareholders can be wiped out via bankruptcy.

Still, the focus on dividends is where this gets interesting as they are not directly tied to profitability. Ditto share issuances - which cost employers no direct cash - in lieu of cash dividends. Both provide a stronger incentive for employees to want the company to thrive.
Shareholders are specifically compensated for the risk they are taking, and anyone who is investing smartly knows to diversify.

The problem with employees being paid in shares is that they are undiversifying their risk. They already hold financial risk associated with Company X, by virtue of relying on X for a job, adding piles of stock increases that risk.

Now, you say it provides incentive, and it does, but it's basically constrained by the prisoner's dilemma. I could bust my ass all year and drive up the stock price by one cent. What really matters is what everyone else does, and I don't control that.
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Old 09-23-2019, 04:49 PM
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What would stop these corporations from simply reducing employee wages as a result? The workers might not be taking home any more additional take-home pay when all is figured in.
Not reducing wages, but when a bonus plan began it was made clear that the bonus was instead of, not in addition to, a raise. In case of bad times the company would not have to pay the higher salary, but the original salary and no bonus money.
It was sold as a way of reducing the number of layoffs. As if that happened.
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Old 09-23-2019, 04:51 PM
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Maybe there could be a compromise in that a certain percentage of money used for stock buybacks would have to go to a dividend program.
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Old 09-23-2019, 05:40 PM
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Why would I want to invest in, say, GM, when I'm going to not get my full share of the profits, rather than investing in Toyota or Volkswagen, where I'll get my fair share?
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Old 09-24-2019, 11:27 AM
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Lawyers and financial engineers would find loopholes to work around the law if it were put in place.

Mexico has a profit sharing legal requirement. So, now most Mexican companies put all the employees into a separate company that bills the operating company with no employees a fee for the use of the Employee Company, such that Employee Company makes just enough profit, so that a minimal profit distribution is made. The Operating Company with no employees, is where the majority of the profits reside.
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Old 09-24-2019, 11:33 AM
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Lawyers and financial engineers would find loopholes to work around the law if it were put in place.

Mexico has a profit sharing legal requirement. So, now most Mexican companies put all the employees into a separate company that bills the operating company with no employees a fee for the use of the Employee Company, such that Employee Company makes just enough profit, so that a minimal profit distribution is made. The Operating Company with no employees, is where the majority of the profits reside.
Yes... I think we had a recent thread about this very subject, or at least something similar. Your post reminded me of the "Hollywood" style accounting mentioned in that other thread.

Ah, here is the thread: Mandatory corporate profit sharing: Why would it not work (or work well anyway)?.

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Old 09-24-2019, 11:54 AM
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I'd prefer majority (if not full) employee ownership of most companies.
I've sometimes wondered why this isn't a more common - I suspect one of the reasons is that it might be hard for an employee-owned company to raise additional capital that may be required to invest in growth. Chances are the employees only have so much personal wealth that they can invest into the company. Companies might be able to take out loans or issue bonds, but that likely is a lot less flexible than selling shares.

The other thing is that employee ownership of companies doesn't necessarily correspond to balanced ownership of companies. I suspect most employee-owned companies have a small group of senior leaders who own the bulk of the company, with rank-and-file employees owning a fairly small share each. This is likely the natural outcome of almost any company that grows from a startup into a large company - the founders likely want to keep a decent share of the company to themselves, and as they grow, each role in the company becomes less critical, so people applying for that role have less and less leverage to ask for more ownership in the company as they join.

I think it would be very difficult, and likely not worth the effort to try to come up with laws forcing companies to redistribute its earnings more equitably among its staff. If a founder of a company has to pay a janitor employee X% of his profits, he might just hire a cleaning company periodically instead of hiring a janitor. Ultimately, if redistribution is the goal, it seems like it would be much easier to just tax income/capital gains/etc. and redistribute at the societal level than try and get companies to do it on their own.
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Old 09-24-2019, 01:22 PM
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Why would I want to invest in, say, GM, when I'm going to not get my full share of the profits, rather than investing in Toyota or Volkswagen, where I'll get my fair share?
Because employees with a greater stake in the company would get you greater profits? Plus dividends are not directly proportional to profits.
The Times had an article today on the Kraft/Heinz merger, which is a disaster.
They cut employment and R&D to increase profits - which it did to begin with, but they are falling behind, have managers who don't understand the business, and unhappy employees. So profits (and share prices) fell in the long run.
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Old 09-24-2019, 03:47 PM
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Is it a wealth transfer? Absolutely, and I think that would be a good thing overall, and may very well lift a lot of working class people out of poverty. The people who are actually creating that wealth should get a fair share of what they create, and not merely what the owners of the company feel like giving them. I think, 30 years after President Reagan left office, we can safely conclude that trickle down economics was a huge flop, so it's high time to try something else, something that doesn't rely on the generosity of those whose modus operandi is to hoard wealth.
The thing you're forgetting is that the employees are paid a wage that doesn't fluctuate based on the profitability of the company. So if the company is losing a little money, they get paid the same as if the company was breaking even or making money.

Investors on the other hand, are taking more of a risk, which means that they're say... investing $1000 today, with the hope that the company will be profitable and they're going to make a $10 dividend and/or some gain in value. But that's not always the case; things might go south, and the shares they bought with that original $1000 are now worth $750. They just lost $250 in value. Meanwhile, the employees are getting paid the same regardless.


Having worked for a company with pretty significant profit-sharing, I can say that it was terrific when we were profitable, but it sucked when we weren't. The company intentionally aimed annual salaries at just below median, with the expectation that they'd make it up with profit sharing. And they did- for 1997 and 1998, I made half again my annual salary in a lump-sum profit-sharing bonus, putting me well above the usual going rate for someone a year or so out of college. Which was good until 1999, when the company fell on hard times and nobody got any profit-sharing bonuses and we were all stuck with shitty salaries- mine was less than a first year teacher without the bonuses. At least I wasn't stupid and living above my bi-weekly paycheck like others were.


And another consideration is what would your rule be if the company wants to reinvest profits in R&D or upgrades or other beneficial stuff? It seems kind of short-sighted to mandate the payment of a dividend if the company wants to use the profits to build a new factory, or devise new products or whatever.
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Old 09-24-2019, 05:37 PM
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The thing you're forgetting is that the employees are paid a wage that doesn't fluctuate based on the profitability of the company. So if the company is losing a little money, they get paid the same as if the company was breaking even or making money.

Investors on the other hand, are taking more of a risk, which means that they're say... investing $1000 today, with the hope that the company will be profitable and they're going to make a $10 dividend and/or some gain in value. But that's not always the case; things might go south, and the shares they bought with that original $1000 are now worth $750. They just lost $250 in value. Meanwhile, the employees are getting paid the same regardless.
And if the company did well and the share price went up to $1250, the employees are still making the same amount. It is also easier for an investor to dump shares than for an employee to change jobs.
Share price is not directly proportional to profitability.

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And another consideration is what would your rule be if the company wants to reinvest profits in R&D or upgrades or other beneficial stuff? It seems kind of short-sighted to mandate the payment of a dividend if the company wants to use the profits to build a new factory, or devise new products or whatever.
The dividend share for employees depends on the dividends for investors. If the company wants to use profit for R&D and not dividends, no problem. Profit sharing plans have the same issue, except that the amount is mandated at the beginning of the fiscal year, and so money used for profit sharing is not available for investment no matter whether or not there are new requirements. Hasn't seemed to be an issue.
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Old 09-24-2019, 05:38 PM
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And another consideration is what would your rule be if the company wants to reinvest profits in R&D or upgrades or other beneficial stuff? It seems kind of short-sighted to mandate the payment of a dividend if the company wants to use the profits to build a new factory, or devise new products or whatever.
Exactly. And that's the analysis corporations undertake. If they have excess funds, they do a vigorous ROI analysis to determine which projects to undertake. Basically, if the ROI is positive, then they might expand product lines, increase manufacturing, build a new factory, etc. If the ROI is not positive for the available projects, then they might return the capital to the investors in the form of increased dividends or stock buybacks.
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Old 09-25-2019, 09:52 AM
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Because employees with a greater stake in the company would get you greater profits?
Maybe, but probably not, else the next new CEO would make it a point to increase shareholder value by giving shares to employees.
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Old 09-25-2019, 01:59 PM
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Maybe, but probably not, else the next new CEO would make it a point to increase shareholder value by giving shares to employees.
Which is common practice in Silicon Valley. But you have to consider employees assets and not expense items to have this mindset, which is not all that common.
There are also ways besides giving stock to do this.
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Old 09-25-2019, 05:11 PM
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Which is common practice in Silicon Valley. But you have to consider employees assets and not expense items to have this mindset, which is not all that common.
My understanding is that this is done in tech because giving equity in the short term is essentially free, versus paying competitive salaries. Large companies not living dollar to dollar do start to offer options as a type of compensation at certain management levels, which is reputed to have positive effects.
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Old 09-25-2019, 05:26 PM
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Maybe there could be a compromise in that a certain percentage of money used for stock buybacks would have to go to a dividend program.
There already is a compromise. Workers get paid first, regardless of profit or loss.

For those who want to risk their money they can buy company stock and get paid those fat cat dividends.
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Old 09-25-2019, 08:13 PM
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My understanding is that this is done in tech because giving equity in the short term is essentially free, versus paying competitive salaries. Large companies not living dollar to dollar do start to offer options as a type of compensation at certain management levels, which is reputed to have positive effects.
I'm not talking startups, I'm talking established companies. Around bubble time options were heavily used, but the tax advantages of them to companies went away, and they are no longer widely given. Stock is given, doled out over years as a method of retention. I've gotten some, and options too in the old days, many of which I did not cash in quickly enough.
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Old 09-25-2019, 08:17 PM
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There already is a compromise. Workers get paid first, regardless of profit or loss.
Except when they get laid off when there is a loss - or even a profit, just not big enough of a profit.

Stock buybacks happen when companies have so much money they don't know what to do with it. So they buy stock back, often at inflated prices, since their flush state also indicates that the stock is high. They often lose money on the deal. (But the CXO execs do well as the price rises.) It wouldn't hurt to invest some in employee satisfaction.
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Old 09-27-2019, 10:25 AM
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Except when they get laid off when there is a loss - or even a profit, just not big enough of a profit.
I'm not at all convinced that we can realistically use "when they get laid off" as the usual consequence if the company suffers a loss. That's not the usual outcome- in fact, everywhere* I've ever worked has absolutely bent over backward to avoid layoffs.

More often than not, they'll try to correct the problem and/or reassign people to avoid layoffs and lack of profitability.

Either way, the workers keep on getting paid the same right up until they aren't. There's no 'risk' in the financial sense- they get paid first, as said upthread. As a matter of fact, unpaid wages have the FIRST claim on assets in bankruptcy. Stockholder value is pretty much the last thing, IF there's anything left after the other creditors are done.

A better way of looking at it would be if you went to work for a startup of some kind- would you rather work for a set wage, or for a percentage of the profit? Unless you have spare cash laying around in case the company doesn't make a large enough profit for you, you're better off being paid that set wage, as they have to pay it to you, regardless of profitability. As a matter of fact, profitability is determined AFTER they pay you.

That's the difference between working for a wage and being an investor in terms of risk. The tradeoff is that if the company does hit it big, then you're still paid the same. Constancy and consistency vs. risk and fluctuation.

The other thing is that at least in this thread, there sure sounds like there's a lot of conflation between profit and an increase in stock price. They're NOT the same thing at all- stock price increases aren't even something that companies have any control over- they rise and fall with the markets in general, but they are also influenced by other, even more vague stuff. It's mostly out of the control of the company- it's something of a proxy for profitability, but a very imperfect one.
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Old 09-27-2019, 05:20 PM
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I'm not at all convinced that we can realistically use "when they get laid off" as the usual consequence if the company suffers a loss. That's not the usual outcome- in fact, everywhere* I've ever worked has absolutely bent over backward to avoid layoffs.

More often than not, they'll try to correct the problem and/or reassign people to avoid layoffs and lack of profitability.
Sure. There are losses when the company is cashflow positive. There are losses during ramp. There are losses due to one time conditions.
But there are plenty of losses due to changing market conditions and overcapacity. I just came from a lunch with the people I used to work with. My old department went from 150 people to 12. This is not because the company is evil - before I left I saw how much product we were making and it was pitiful. The skillsets are different from other parts of the company, so transfers are not practical.
In the current economy people who left found jobs easily, but not so true in 2001.

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Either way, the workers keep on getting paid the same right up until they aren't. There's no 'risk' in the financial sense- they get paid first, as said upthread. As a matter of fact, unpaid wages have the FIRST claim on assets in bankruptcy. Stockholder value is pretty much the last thing, IF there's anything left after the other creditors are done.
Those wages are only for time actually worked. If part of compensation is options, on the other hand, or stock which vests over time, laid off workers are likely to lose this. Which is more like an investment in the company than regular wages. If a worker is lucky enough to get severance then there is a benefit.
Remember, though, that investors can manage risk, while workers can't, only being able to bet on one job and usually not having enough information to start looking before the axe falls.
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A better way of looking at it would be if you went to work for a startup of some kind- would you rather work for a set wage, or for a percentage of the profit? Unless you have spare cash laying around in case the company doesn't make a large enough profit for you, you're better off being paid that set wage, as they have to pay it to you, regardless of profitability. As a matter of fact, profitability is determined AFTER they pay you.
Startups with any profit are few and far between. The worker gets a reduced wage with the potential for money later if the startup is successful. Industries where a large part of compensation is in the form of bonuses might be a better example - bur remember how the bankers complained in 2008 when they didn't get their bonuses after destroying the economy.

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That's the difference between working for a wage and being an investor in terms of risk. The tradeoff is that if the company does hit it big, then you're still paid the same. Constancy and consistency vs. risk and fluctuation.
And that no investor, including the founder, is all in on the risk - while the worker has to be. Investment is gambling. We don't offer wages to workers that are double or nothing on a dice roll.
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The other thing is that at least in this thread, there sure sounds like there's a lot of conflation between profit and an increase in stock price. They're NOT the same thing at all- stock price increases aren't even something that companies have any control over- they rise and fall with the markets in general, but they are also influenced by other, even more vague stuff. It's mostly out of the control of the company- it's something of a proxy for profitability, but a very imperfect one.
True. And even less correlation between stock price and dividends. A lot of my investments now are to generate cash, and are in dividend stock funds, which are more stable than the average stock. Less upside, less downside, but I don't care.
  #39  
Old 09-28-2019, 06:47 AM
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Originally Posted by Velocity View Post
What would stop these corporations from simply reducing employee wages as a result? The workers might not be taking home any more additional take-home pay when all is figured in.
A government that requires higher minimum wages or that a certain share of the profits be dispersed back to employees.

I wish it wouldn't come to this; I'm basically a "let the market do its thing" kinda guy, but when corporations have too much wealth and too much power concentrated in their hands, it becomes increasingly obvious that the invisible hand doesn't always reward people equitably.
  #40  
Old 10-02-2019, 03:40 PM
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The Norwegian system of unionization and the Three Part-Cooperation (Workers, Employers and the State) holds holy that investors and owners are entitled to a 2-4% dividend. (Depending on the profit margin of the given industry.) Any profits above and beyond that, the union submits claims to part of that sum to be dispersed to the workers as wage raises or benefits in biannual, local negotiations.

This is how wages are mostly set in Norway, with the exception of negotiating your starting wage on the salary ladder, or for smaller or more libertarian style industries like law, where wages are usually directly negotiated.

It's an incredibly flexible system in practice, because it encourages a symbiotic relationship between the employers and the employees. The balancing weight is the counter-cycle central negotiations, where the workers union and the employers union negotiate the minimum salary ladder for the industry.

So in the central negotiation in year 1, the workers union and the employers union agree (eventually, after a lot of doom and gloom in the media) that no unionized electrician can with 2 years of experience can be paid less than 200 kroner per hour.

Because the electrician Kim works in a profitable business, the local union and the management agree that 30% of the profits above a 4% percentage point dividend is used to raise the wages, Kim got a 3 kroner raise this year. Since it's been a profitable business over several years, Kim's hourly wage is now 212 kroner.

Tom, however, works in an electrician business that's going poorly. They've had to cut costs and barely made a profit of 5%. The management and the union agree that while there's something left after a 2-4% dividend to the owners, it's too risky to raise the wages this year and the money is better spent investing in new tools or as a capital buffer for next year.

Chris also works in an electrician business that's going poorly, but the management and the union is worried about people quitting in favor of businesses going well and the morale hit of a zero raise, which is actually a pay cut due to rising expenses. Instead of raising wages, the profit above the 2-4% dividend goes out in a lump-sum bonus along with the gratitude of the management, or as benefits like subsidized parking or staff parties.

Lastly, Jane works in an electrician business that's going so poorly, the union and the management are negotiating cutbacks to salary above the central union's minimum requirements just to keep the doors open, so Jane's salary is cut from 212 kroner to 203 kroner an hour.
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