Sure, but why does the profit have to go to the shareholders? Companies are expected to enrich their shareholders before they enrich the talent actually making the product they sell and I think people are right to question that. Asking why someone who makes a company 200k profit per year is being paid 50k is a fair question to ask.
>Sure, but why does the profit have to go to the shareholders?
Because that's how companies are supposed to operate? Broadly speaking, companies are generally expected to pay their gross revenue three groups of people:
1. shareholders
2. bondholders/creditors
3. employees
Employees get first dibs on the cash, but the amount they're expected to earn is capped. Bondholders comes next, and shareholders come last. If there isn't any money left over, they get nothing. In exchange, they also get all of the returns, should the enterprise succeed, as well as control over it.
Hmm, yeah I think I grok the argument. But if excess cash flow can go to employees, would you also expect employees to inject their savings when the company has a shortfall?
I always considered employment a fairly simple exchange of my services for a fairly set rate, and investors/owners/funders to be the risk takers for ups & downs?
why on earth would they do that? It's not like the executives or shareholders would. I'm certainly not throwing any additional cash at a single company I'm invested in if it's on hard times.
