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READING THREAD (1/8): “the public #corporation no longer serves the interest of their most important #shareholders—retirement investors—or the most critical part of their workforce: knowledge workers”. https://hbr.org/2021/01/its-time-to-replace-the-public-corporation
“Executives incentives are not aligned with retirement investors’ need for long-term value creation. What’s more, the investors are largely powerless to change this state of affairs” (2/8)
“The bottom line is that institutional #investors have neither the ability nor the incentive to discipline executives, protect companies against a rapacious hedge funds, or even encourage companies to compete aggressively.” (3/8)
“The dominant model asks workers to toil under executives whose financial welfare is determined by the stock $, in the interests of owners no one knows. [Knowledge workers, asked to work for the benefit of shareholders, make sacrifices to meet quarterly financial goals].” (4/8)
“Any new model must overcome fundamental #governance problems of widely held #corporations: that CEO’s incentives are at odds with long term interests of those stakeholders... & the model must diminish the ability of activist #hedgefunds to extract gains at their expense.” (5/8)
Author suggests successor model to public #corporations: “the long term enterprise, a private company in which ownership is limited to the #stakeholders with the greatest interest in long term value: #retirement investors and #employees.” (6/8)
“Stock options don’t provide an incentive [for employees/knowledge workers] to engage for the long term. That’s where employee stock ownership comes in.” #ESOP (7/8)
My question about ESOPs from an inclusion perspective. We know only ~<40% of all Americans invest in retirement accounts that seek returns from the stock market, for various reasons including access. Would more ESOPs enable more retirement savings by more people, or the opposite?