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Who should take the increase in capital value? The question that is always asked

Tmarket 2024. 1. 28. 08:59
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Who should take the increase in capital value? The question that is always asked in the world of capitalism

Warren Buffett cited a proper performance compensation system as the biggest factor in determining the rise and fall of a company
In other words, the system produces maximum output only when there is adequate compensation as it has contributed to the performance

If you look at the difference between underdeveloped and developed countries, it's different here
The reason why Africa and South America can't escape the underdeveloped world's spiral is because
That's because society doesn't reward those who perform, but the wrong ones take the performance

How should compensation be divided for performance if a company operates well and its value rises

a shareholder who is the owner of the company's capital
a manager who has been commissioned and executed the allocation of the company's capital
Ordinary employees who worked hard to achieve corporate development by becoming actual hands and feet

in the current system
Managers and general staff receive salaries at the same time as they receive support for the performance of their duties
And all remaining profits are attributed to the company, and eventually to shareholders

Compared to what the powerful (king, aristocrats) used to take, it has made tremendous progress in human society
But questions still remain
Does it make sense that the owner of the capital in the past takes all the increase in the newly created capital?

I can think of two things
1) Who will work hard for the increase in capital if the owner of the capital in the past takes all the newly created capital increase
So, modern firms seem to reduce these mismatches by adding incentives linked to stock options or increase in the company's capital value, rather than fixed salaries

2) However, there is also an aspect that makes sense for shareholders to take all the increase in newly created capital.
Why?
That's because shareholders bear all the losses when capital is broken
In fact, the framework of performance compensation includes the burden of loss
However, managers and general staff do not bear the loss
It's because we've only seen successful cases of capital investment such as Tesla and Apple in the media
There are far more examples of capital investment being broken
(Think of most self-employed investments)

Since managers and general employees are not responsible for capital losses, employees can be seen as free rides in this part
I think the risk compensation rate of return considering roughly risk is similar to that of managers and general employees
Otherwise, managers and general employees will all try to start their own businesses as shareholders, but no one will try to become employees
(In fact, the perception of these risk-reward returns varies from individual to individual and from situation to situation, so in reality, some people start a business and others get a job.)

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