Yep, I'm starting another generational thread

[TSmith34, Inc.]

Why are stock options a good option for encouraging long term loyalty to a company? Would I take them, sure I would, I do with my 401k match, but I don't think stock options would do anything to engender long term loyalty.

Because in a well-designed LTI plan they are 1) Performance-based, meaning you get more based on not only your performance but also the company performance.  The intent is to not only keep talent, but improve company performance, which tends to have a halo effect--people will stay at a company longer if it is doing well, and 2) more importantly, LTI vests over rolling periods, so you often see only 1/3 vest in a given year, meaning there is always a portion you need to stick around for until it vests.

Of course, as Jay Bee noted, this isn't always enough incentive to get people to stick.  They may still have a better offer, or the company may be performing poorly making your incentives worthless.  If your grant was at say $25/share and you're trading at $12, the incentive has no value.  There are swaths of people at dying companies such as JC Penney and even GE that have been sitting on worthless LTI grants for years.

[TSmith34, Inc.]

If you're a 35 year old with two kids making $75k/year, you need to make the move for the extra $10k/year, because while the stock option might be the higher ceiling compensation package, its a risk you just can't afford to take.

Exactly right.  Not to mention that outside of a start-up situation, someone making $75K/year is highly unlikely to be in line for equity grants, and if they are it is an insignificant pittance.  So again, that is why it is the right financial move for job hoppers, because a $10K increase for someone earning $75K makes a tangible difference in their lives.

[mu03eng]

Because in a well-designed LTI plan they are 1) Performance-based, meaning you get more based on not only your performance but also the company performance.  The intent is to not only keep talent, but improve company performance, which tends to have a halo effect--people will stay at a company longer if it is doing well, and 2) more importantly, LTI vests over rolling periods, so you often see only 1/3 vest in a given year, meaning there is always a portion you need to stick around for until it vests.

Of course, as Jay Bee noted, this isn't always enough incentive to get people to stick.  They may still have a better offer, or the company may be performing poorly making your incentives worthless.  If your grant was at say $25/share and you're trading at $12, the incentive has no value.  There are swaths of people at dying companies such as JC Penney and even GE that have been sitting on worthless LTI grants for years.

I understand the concept, but the whole idea is predicated on someone "giving" you money that might not actually turn into money. Additionally, the people who are in position to take advantage of options are likely already highly compensated.

Granted I'm biased because I think as a country and corporations have tied to much performance and compensation packages. It was intended to provide long term stability, however with technological advances and generally improved access, stocks are much shorter in vision then they ever were before. Too much, what have you done for me lately IMO.

[JWags85]

All of the Nordic countries certainly come to mind. Though, you might argue that the effective poverty of those countries is already much lower than in the US, so a true rags-to-riches example might be less dramatic there. Plenty of examples of how their society lifts up the impoverished and promotes equivalent opportunities in education/etc for children - rich kids get the same education as everyone else there.

I think Nordic countries are a problematic comp because they are countries with populations lower than NYC (save for Sweden) but yet blessed with tremendous and valuable natural resource deposits.  That goes a long way in funding things like free education and healthcare.  Even if you jacked up taxes in the US to Nordic levels, you wouldn't be able to fund things like they have due to a lack of per capita income the government has from non-tax based revenue.

[Jay Bee]

I understand the concept, but the whole idea is predicated on someone "giving" you money that might not actually turn into money. Additionally, the people who are in position to take advantage of options are likely already highly compensated.

Understand, there has been a big shift from stock options to RSUs... so even if stock price declines, there is value.

[Jay Bee]

https://www.bloombergquint.com/politics/2018/06/26/now-even-swedes-are-questioning-the-welfare-state

[jesmu84]

https://www.theatlantic.com/video/index/558143/kansas-tax-cuts/

[MU Fan in Connecticut]

Also from The Atlantic

The 9.9 Percent Is the New American Aristocracy
The class divide is already toxic, and is fast becoming unbridgeable. You’re probably part of the problem.

https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/

[mu03eng]

Also from The Atlantic

The 9.9 Percent Is the New American Aristocracy
The class divide is already toxic, and is fast becoming unbridgeable. You’re probably part of the problem.

https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/

Looking forward to this.

I might recommend to this group this book. It does a great job (IMO) of de-romanticizing the American Revolution and surface who the revolution really changed culture while baking into society various inequalities. It's a fascinating read in the context of our current situation.
https://www.amazon.com/Whirlwind-American-Revolution-War-That/dp/162040172X

[Juan Anderson's Mixtape]

Looking forward to this.

I might recommend to this group this book. It does a great job (IMO) of de-romanticizing the American Revolution and surface who the revolution really changed culture while baking into society various inequalities. It's a fascinating read in the context of our current situation.
https://www.amazon.com/Whirlwind-American-Revolution-War-That/dp/162040172X

The problem of class inequality dates back to start of colonization.  I recently started a book on the topic, but stopped reading 25 pages in.  So I can't say I would recommend it.

But the gist of what I read called American colonies a dumping ground for the "rubbish" of English society.  Today these "rubbish people" are referred to as "white trash."

[Herman Cain]

Also from The Atlantic

The 9.9 Percent Is the New American Aristocracy
The class divide is already toxic, and is fast becoming unbridgeable. You’re probably part of the problem.

https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/

I keep advocating for MU to pay attention to its US News ranking . At the end of the day it matters.

[mu03eng]

The problem of class inequality dates back to start of colonization.  I recently started a book on the topic, but stopped reading 25 pages in.  So I can't say I would recommend it.

But the gist of what I read called American colonies a dumping ground for the "rubbish" of English society.  Today these "rubbish people" are referred to as "white trash."

It dates back to the dawn of modern humans, those with power (which often equates to wealthy) seek to retain and expand their power as well as the power of their descendants.

[mu03eng]

I think one of the things I struggle with in the "lucky" discussion and the debate over concentration of wealth is how do you pragmatically legislate outcomes to try and eliminate some of the imbalance. I think there are some obvious ones, like taxing capital gains at the same rate as normal income....i.e. we don't need to make it easy for the wealthy to make yet more wealth. On the other hand, I also wouldn't want to be punitive in someone trying to generate wealth because you can't legislate out the drive to better yourself, just ask any of the countries that have given socialism a try.

And maybe this is where Benny has something with the mandatory voting, it starts to take some of the governing power away from the wealthy which in turn allows government to legislate from a more neutral place.

[GGGG]

I keep advocating for MU to pay attention to its US News ranking . At the end of the day it matters.

From the article:

“The colleges seem to think that piling up rejections makes them special. In fact, it just means that they have collectively opted to deploy their massive, tax-subsidized endowments to replicate privilege rather than fulfill their duty to produce an educated public.”

Amen. That is why this sh*t not only doesn’t matter, but actually runs counter to the mission of Marquette University and the reason colleges and universities are granted exemption from federal and state taxes.

[GGGG]

I think one of the things I struggle with in the "lucky" discussion and the debate over concentration of wealth is how do you pragmatically legislate outcomes to try and eliminate some of the imbalance. I think there are some obvious ones, like taxing capital gains at the same rate as normal income....i.e. we don't need to make it easy for the wealthy to make yet more wealth. On the other hand, I also wouldn't want to be punitive in someone trying to generate wealth because you can't legislate out the drive to better yourself, just ask any of the countries that have given socialism a try.

And maybe this is where Benny has something with the mandatory voting, it starts to take some of the governing power away from the wealthy which in turn allows government to legislate from a more neutral place.

Invest more in education, especially moving back toward grant-based financial aid.

Cap deductions for mortgage interest, SALT taxes, etc.

IOW increase taxes, which will never happen due to the “libertarian” mindset that infects this country.

[Juan Anderson's Mixtape]

It dates back to the dawn of modern humans, those with power (which often equates to wealthy) seek to retain and expand their power as well as the power of their descendants.

To clarify, my comments were with regards to American history.  The land of equal opportunity is a myth.

But, yes, class inequality stretches deep into history.

[mu03eng]

To clarify, my comments were with regards to American history.  The land of equal opportunity is a myth.

But, yes, class inequality stretches deep into history.

I guess my point is that I don't know how you ever eliminate "class inequality". There will always be haves and have nots, whether someone is born into wealth/poverty, born talented/untalented, etc etc etc. I think we need to make every effort to eliminate artificial barriers but I truly believe you can't generate outcomes, only opportunities.

[mu03eng]

Invest more in education, especially moving back toward grant-based financial aid.

Cap deductions for mortgage interest, SALT taxes, etc.

IOW increase taxes, which will never happen due to the “libertarian” mindset that infects this country.

I'm not convinced it's a funding problem, or at least just a funding problem. I think, in part, we have really entrenched interests that are more comfortable with the status quo. College education has never been more accessible (in terms of availability and meeting entrance requirements) but it has never been less affordable. Is that because of the level of funding or is it because of the way we choose to structure the college experience that drives up cost or is that we're created an arms race amongst colleges while "forcing" more people into college to get lower level jobs (I'd argue some combination of the three)?

Yes, we do cater to the wealth in society and I think we need to roll that back, but I also don't think that means "higher taxes" I'd frame it more from the perspective of eliminating their exclusion from taxes.

Lastly, I'm curious as to this libertarian vitriol. As a self proclaimed libertarian I'd love to understand what about it you see as so prevalent (I don't think it is) and harmful

[Lennys Tap]

Lastly, I'm curious as to this libertarian vitriol. As a self proclaimed libertarian I'd love to understand what about it you see as so prevalent (I don't think it is) and harmful

+1

[GGGG]

I'm not convinced it's a funding problem, or at least just a funding problem. I think, in part, we have really entrenched interests that are more comfortable with the status quo. College education has never been more accessible (in terms of availability and meeting entrance requirements) but it has never been less affordable. Is that because of the level of funding or is it because of the way we choose to structure the college experience that drives up cost or is that we're created an arms race amongst colleges while "forcing" more people into college to get lower level jobs (I'd argue some combination of the three)?

Yes, we do cater to the wealth in society and I think we need to roll that back, but I also don't think that means "higher taxes" I'd frame it more from the perspective of eliminating their exclusion from taxes.

Lastly, I'm curious as to this libertarian vitriol. As a self proclaimed libertarian I'd love to understand what about it you see as so prevalent (I don't think it is) and harmful

I think there is a mistaken belief that somehow we grew as a society due to rugged individualism. From Horacio Alger to Atlas Shrugged, there is almost a myth about how anyone can just pull themselves up by their bootstraps. (Which obviously can happen but mostly it doesn’t.)

In reality we have advanced as a society due to the communities in which we have belonged. People sacrificed for one another and helped out their neighbor so society overall could benefit.

For many parts of society, that sense of community has broken down. Including the government, which despite propaganda of the past 50 years, has actually been quite effective at education, poverty reduction, defense, research and development, etc.

We’ve become selfish. Taxation is part of that. Libertarianism is by and large a selfish philosophy propagated by those who have benefitted from society and refuse to recognize it.

[Jay Bee]

We’ve become selfish. Taxation is part of that. Libertarianism is by and large a selfish philosophy propagated by those who have benefitted from society and refuse to recognize it.

^^^^ ban this guy

People don’t like libertarians because we’re principled. The masses don’t want to live by principle. They want to live by feelings, group think and the swaying of the wind. Sad!

#banSultan

[GGGG]

^^^^ ban this guy

People don’t like libertarians because we’re principled. The masses don’t want to live by principle. They want to live by feelings, group think and the swaying of the wind. Sad!

#banSultan

Talk about living by feelings instead of reality...

[jesmu84]

I'm not convinced it's a funding problem, or at least just a funding problem. I think, in part, we have really entrenched interests that are more comfortable with the status quo. College education has never been more accessible (in terms of availability and meeting entrance requirements) but it has never been less affordable. Is that because of the level of funding or is it because of the way we choose to structure the college experience that drives up cost or is that we're created an arms race amongst colleges while "forcing" more people into college to get lower level jobs (I'd argue some combination of the three)?

Yes, we do cater to the wealth in society and I think we need to roll that back, but I also don't think that means "higher taxes" I'd frame it more from the perspective of eliminating their exclusion from taxes.

Lastly, I'm curious as to this libertarian vitriol. As a self proclaimed libertarian I'd love to understand what about it you see as so prevalent (I don't think it is) and harmful

My perspective is that it has been driven by the Koch's and then others in the ultra wealthy corporate arena piled on when they saw the success the Koch's were having with politics/power/influence.

They have used their resources to push their libertarian, and some far-right, agenda to the middle. Some of them may have principles. However, the great majority are merely supporting issues which enrich themselves on a personal level. Few of their "wants" are geared toward enriching society or citizens outside of the ultra wealthy.

I don't fault libertarian ideals. Or libertarian philosophy. I fault those who call themselves libertarian in this gross mis-label.

[Jay Bee]

Talk about living by feelings instead of reality...

False! The rule is no politics and you’re disparaging Libertarians. You’ve stuck your dainty middle finger up at the no-politics rule time and time again. Awful.

[Herman Cain]

From the article:

“The colleges seem to think that piling up rejections makes them special. In fact, it just means that they have collectively opted to deploy their massive, tax-subsidized endowments to replicate privilege rather than fulfill their duty to produce an educated public.”

Amen. That is why this sh*t not only doesn’t matter, but actually runs counter to the mission of Marquette University and the reason colleges and universities are granted exemption from federal and state taxes.

There are different colleges for different people. You are correct certain schools should not care about US News and go about building their academic institution to best meet the needs of its customers.

Marquette University is a nationally recognized institution that has a peer group that it has to compete with.  It is foolish not to play the marketing game if your Marquette, especially since MU has a very good academic product. That is a waste of an asset in my opinion.