Elon Musk billionaire investor Mark Cuban said on the Unmoderated News podcast “What It Takes” that employee ownership of company stock should become the norm. He also proposed specific policy mechanisms: governments can offer a corporate income tax rate below 21% as an incentive to encourage CEOs to grant each employee stock warrants or options in the same proportion.
Mark Cuban’s Employee Stock Ownership Policy Proposal
The policy mechanism Cuban proposed is as follows: governments can offer a corporate income tax rate below 21% as an incentive to encourage CEOs to grant each employee stock warrants, options, or other equity in the same proportion. The logic is: if a CEO receives stock worth 10% of their cash compensation, then all employees—including janitors—should also receive stock worth 10% of their own compensation.
Cuban explained on the podcast: “If a CEO gets $100 million worth of cash and receives $100,000 worth of stock, and a janitor earns $50,000, then they should get the same proportion of stock—this would change the game.” The design aims to achieve wealth sharing across different salary levels through free-market mechanisms rather than government mandates.
Cuban’s Own Case: In Broadcast.com’s 330 Employees, 300 Became Millionaires
Cuban said on the podcast that at Broadcast.com, a media company he owned that was acquired by Yahoo in 1999 for $5.7 billion, he granted stock to all 330 employees, and 300 of them became millionaires after the acquisition was completed. His first IT consulting firm, MicroSolutions, also used a similar approach, issuing equity and cash bonuses to employees. On X, Cuban added: “I have at least created or helped create a thousand millionaires, and I’ll keep working to make that number keep getting bigger.”
SpaceX IPO Employee Wealth Effect: Juan Hernandez’s Case with $880,000 in Stock Value
According to The Wall Street Journal, former welder Juan Hernandez joined SpaceX in 2015 at an hourly wage of $28. After the SpaceX IPO (with a valuation of about $1.77 trillion) was completed, the estimated value of the company stock he held was $880,000.
SpaceX’s IPO created at least 4,400 millionaires in just over a month. Earlier this month, Elon Musk also told the governor of Texas: “I’ve always believed that everyone in a company should get company stock so they can share in the returns that come from the company’s growth.”
Academic Research Supporting It: Employee Ownership Studies from Harvard in 2021 and Rutgers in 2004
Academic research showing positive effects of employee ownership on wealth equality mainly includes:
Harvard Business School’s 2021 Study (citing government data): If employees hold 30% of the shares in all private U.S. companies, U.S. household wealth would double; the net wealth of the top 1% would average 14% lower
Explanation by Harvard Business School Professor Ethan Rouen: “When everyone’s interests align with a shared goal, everyone works harder… and that’s likely to make the pie bigger and create wealth for all participants”
Rutgers University’s 2004 Study: Companies that give employees at least 5% equity are more likely to survive than companies that don’t offer this benefit; the researchers attribute this to greater job security
FAQ
How exactly would Mark Cuban’s employee stock ownership policy proposal work?
Cuban proposes using a corporate income tax rate below 21% as an incentive to encourage CEOs to issue stock to all employees in the same proportion as the CEO. If the CEO receives stock worth 10% of their cash compensation, then all employees—including janitors—should also receive stock worth 10% of their own income. The design is intended to implement wealth sharing through market mechanisms, not government coercion.
Why is the holding case of SpaceX former welder Juan Hernandez cited?
According to The Wall Street Journal, Juan Hernandez joined SpaceX in 2015 at an hourly wage of $28. After the SpaceX IPO (valuation about $1.77 trillion) was completed, the estimated value of the company stock he held reached $880,000. This case is cited to show that employees owning stock in their company can produce a significant wealth effect when the company goes public.
What conclusions does the Harvard Business School research reach about employee stock ownership?
Harvard Business School’s 2021 study (citing government data) says that if employees hold 30% of the shares in all private U.S. companies, U.S. household wealth would double, and the net wealth of the top 1% would average 14% lower. Another Rutgers University 2004 study shows that companies that provide employees with at least 5% equity are more likely to survive, which the researchers attribute to greater job security.
