alt Hacker NewsI don't understand how slivers of stock is supposed to incentivize anyone to do anything.
Amazon has 1.5 million employees. Say that it's a completely fair co-op and I have a 1-in-1.5-millionth share of the whole company. Their market cap is about 2.5T, so this is about 1.6 million USD in stock that I own. (By amazing coincidence, their market cap in USD is about the square of the employee headcount)
But if I'm a rank-and-file employee with nobody under me, then doubling my production could only be equivalent to adding one more 1-in-1.5-millionth to the company's value, right? Equivalent to hiring one more employee at my level.
For that impossible extraordinary 80-hours-per-week double effort, my stock would go up... a dollar, right? Roughly 1-in-1.5-millionth of my 1.6 million dollars of stock.
I think it's a joke. I think "stock incentivizes people to work harder" is a little joke that people tell each other so that labor will be pacified with company stock and leftists will bicker about co-ops instead of saying the quiet part which is that people just want more money
I just don't see any math in which stock isn't basically a tragedy of the commons for boots-on-the-ground workers. If I was paid for exactly the labor I do, doubling my effort doubles my paycheck. If I have stock, some of that revenue is spread to everyone else who has stock. Giving everyone stock doesn't incentivize anyone any more, right? What am I overlooking?
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You are overlooking the part where you affect more than just your own behavior, but that of your colleagues. You also assume a linear function of productivity and stock price.
Yeah I think it only really makes sense for people who are very high up (and are given a lot of stock) and for the purpose of creating an environment where "we all work really hard" (and slackers are looked down on). I think Amazon's leadership principle is going for the latter: create social costs for not working hard.
>For that impossible extraordinary 80-hours-per-week double effort, my stock would go up... a dollar, right? Roughly 1-in-1.5-millionth of my 1.6 million dollars of stock.
That might be the case if workers were bricklayers and output was measured in walls. But supposedly this incentive might cause you to have a brilliant idea that makes billions for the company, and then you're gaining more than a few bucks.
I’m not going to strongly defend it but this “doubling my production could only be equivalent to adding one more 1-in-1.5-millionth to the company's value, right?” isn’t true; if your work scales or you are managing people, you could move the needle more - say you launch a new service from scratch.
The real purpose of equity grants is to fudge the OpEx accounting costs on non-GAAP reports.