A THOUSAND POINTS OF WEALTH

Fourth, the Silicon Valley model of compensation…

…is infecting more parts of the world. A major element of equity culture is the ideology that every person working in a company should have the opportunity to own part of it. In most American high-tech companies, stock options for employees are mandatory. Shares in the company are often used to recruit hot talent, or to be dispensed as bonuses, or, in the case of start-ups, to be paid out as a substitute for a salary. Companies that grant stock options to all employees return greater wealth to shareholders than companies that don’t (19% for the former, 11% for the latter).