But that means employees cannot sell their stock, either. So if one of those millionaire employees retires and the company goes bankrupt one year later, the million is worthless all of a sudden.
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.
It sounds like this is a much healthier concept overall?
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.
Right, so everyone is interested in the long term health of the company.
It's a different model, one that may well be better than what most are doing. Of course most CEOs, private equity, and folks on Wall Street want you to think otherwise.
If this happens, people who have worked at the company for 15 years and have most of their "retirement" in the form of ESOP shares will a) lose their jobs and b) lose most of their retirement savings. On the same day.
Libertarians sometimes fantasize about how if we didn't have the FDA, people would be incentivized to do their own research on food and drug safety. Sure, sometimes dumb people would get it wrong and kill themselves! But that's just the price we (well, they) need to pay for everyone to have good incentives. This seems like the same category.
In the contrary, I expect the owners of an ESOP are very much in favor of having a well managed separate employee retirement fund. More so than in a publicly owned company.
But of course you are right that the risks factors of losing your income and losing your investment are pretty much 100% correlated for an ESOP. Some investment diversification is always a good idea.
