I read an article on Fortune recently titled “An easier solution to wealth inequality?“. The article suggests “corporate profit-sharing, employee stock ownership, and stock option plans” as a way to help balance out some of this inequality.
It also points out, rightfully so, that this plan isn’t without some challenges – perhaps the biggest being: If it works, people may wind up with an unusually large (dangerously large) percentage of their wealth linked to a single investment; namely the stock of the company they are working for. It’s pretty common advice to spread your risk across multiple investments, like in one or more mutual funds, or even to tie your investments to an index fund (as Warren Buffett has suggested).
That said, I personally love the idea. I love the idea so much that we did something similar with OrcsWeb 4 1/2 years ago – we (the shareholders, of which I was a majority holder) decided to put an Employee Stock Ownership Plan (ESOP) in place so that the employees could share in the growth and value of the company. Some people “got it” and started thinking a bit more like an entrepreneur and some didn’t. Regardless, everyone got to benefit from it- at no cost to them personally.
I’d love to see more companies offer incentive programs like this. To me it just makes sense. Of course, as a business owner, doing this means you dilute yourself, so there is some downside if the amount of money at your liquidity event is your biggest motivator.