Quote:
Originally Posted by Smokey23
Somebody help me out here (SWA employee). Why is your management apparently so hot to cut profit-sharing? I would think if anything they would be wanting more profitability-based compensation, as it is (from their perspective) nicely self-regulating through the good times and the bad?
Because by definition profits are the property of the shareholders (read any web search about Microsoft trying a few years ago how to get rid of a $50 billion plus cash hoard--you will notice that "profit sharing to employees" was not one of their options). Any profit sharing that goes to employees is in actuality paid from the shareholders to the employees. Many shareholders don't mind that on a small scale, as it hopefully makes for happier employees that generate more profits even with the profit-sharing than they would have without the program.
However when profit sharing is $1 billion plus--who would have ever imagined it?--Wall Street gets uptight and the Board of Directors (who represent the shareholders) gets a lot of pressure put on them to reduce the profit sharing to employees so that the shareholders can get it all via dividend or stock buyback.
Not saying that is how it should be, but how it is.