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Comment by IneffablePigeon | Hacker News Reader

Equity is always worth _something_ if the company doesn't fail. At some point investors want to make some money back, whether that's through a sale of some sort or just through dividends.

I do agree those are quite different beasts and you want to have an idea of the relative likelihoods if you're making a decision based on them.

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Equity in some companies means actual voting power, especially when one party doesn’t retain 50%+ control.

Minority equity in a company means nothing.

Let's vote on the $20mil bonus to the CEO or distribute it amongst the owners of the company. Oh, the CEO (and majority owner) gets it all.

Dividends are taxed at a lower rate than salary and other forms of ordinary income. If a company has surplus money, it should eventually be remitted to the equity holders as dividends. I guess it doesn't need to be, though.

Unless the CEO literally owns >50% I don’t see how it means ‘nothing’. Voting blocs come and go I imagine, that’s definitely something.

Employee options pools tend to be maintained at 10-15% of the company. Unless you are a cofounder, very-early employee, or recruited-big-exec in a growth phase, your equity, AND importantly, ALL the equity from your employee peers sums to less than whatever the VCs+Founders want. Ideally your interests are aligned, and any gain they get your share-in (albeit in a much smaller amount). But things like preferred shares getting liquidation preferences screw with this calculous, as to differing investment horizons.

When any of the above mentioned have disagreements, won’t they try to recruit support from the remaining shareholders?

Almost all equity given to employees is a totally different class of shares than held by the founders.

What company gives out >50% of their company to their employees?

> [...] or just through dividends.

What if the company never pays dividends?

Like Google?

Or any company that prefers buybacks over dividends.

Economically, they are the same. But they are taxed differently in many jurisdictions.

(Though in the case of buybacks, the shares you got as an employee are worth something, if the buyback is done as something like an auction.)

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