Comment by nikanj
2 days ago
This model, unfortunately, often leads to a "well, we might as well spend the extra profits on executive benefits"-issue. Whenever you have money without oversight, you always face a moral hazard.
If the company makes a profit and there aren't shareholders there to keep the stewards in check, excesses can and do develop.
I get the first point, but having shareholders doesn't solve that in any way. Shareholders would just give themselves payouts instead of letting the execs take everything as bonuses. And unlike the execs, whose bonuses could be limited by charter and who could be chosen on the basis of trust, shareholders are "whoever has the most money to throw around", so there's no mechanism to align them with company values.
So it's not perfect, but it sure as hell beats having shareholders.
> Shareholders would just give themselves payouts
Precisely, in the form of the #1 trend of public companies, stock buybacks! I've seen aggressive buybacks take a company with a ton of money in the bank and a profitable business and drive it right to Chapter 7 bankruptcy in just a few short years.
It's not as if public companies don't overspend on executive compensation. I think one CEO recently asked for a trillion dollar compensation package?
I'll make you a deal. You agree to give me a trillion dollars, but only if I make you 8 trillion dollars.
I don't think he'll deliver and I think it's based on fantasy economics, he's been really losing it recently, but as a deal it's not entirely irrational if he could make it happen.
The thing is, the compensation is only based on it happening, not on him making it happen. “I make you 8 trillion dollars” rests on a strong assumption that it all comes from the CEO.
This particular CEO is on the more influential end of the spectrum, but I think executives generally get too much credit for outcomes. If this does happen, it won’t just be because of the CEO, but also because of ~100,000 other employees. Their contribution might be smaller, but comparing compensation, I don’t think it’s proportionally smaller.
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Steward-ownership is a philosophy more than an actual structure, my understanding is that each such company is in practice structured somewhat differently.
This article explains roughly how Patagonia is structured: https://medium.com/@purpose_network/the-patagonia-structure-...
For Patagonia a trust owns 100% of the voting rights, while a charity collects 100% of the dividends. I don't doubt that there are ways the structure could be subverted, but it's a far cry from "money without oversight".
Do you have examples of Steward-owned companies that ended up with "well, we might as well spend the extra profits on executive benefits"-issues?
(I personally think Steam should go in that direction, otherwise I'm afraid enshittification is unavoidable once Gabe Newell is no longer at the helm)
Huh, fascinating. The Patagonia structure is actually strikingly similar to the Bosch model - non-profit owning the shares, but no voting rights, trust having voting rights but no shares - just taking it to the logical 100% conclusion without the residual influence of the Bosch family (having retained a few percent in both).
The model has worked well for many decades for a 100 billion$ revenue company like Bosch, good to see others taking a cue from them.
(Also goes to show that even constructs like these are not safe from corporate fuckups - see the emissions scandal...)
Shareholders are not an effective check in most cases. They are with private companies where individual shareholders have a lot at stake - its their money that is being wasted.
If they can just easily sell the shares they will do that instead.