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Key Takeaways
- Mark Cuban said that more companies should offer stock-based compensation plans, a step that he believes would reduce economic inequality.
- Cuban said that Elon Musk created over 4,000 millionaires with SpaceX’s IPO—an example for CEOs, founders and entrepreneurs.
- Some 511 U.S. publicly traded companies had employee stock ownership plans as of 2023, according to the nonprofit National Center for Employee Ownership.
What can the U.S. do to narrow the chasm between the very rich and the very poor? One billionaire thinks he has the answer.
The solution, per Mark Cuban, Shark Tank investor and minority owner of the Dallas Mavericks, is more people owning “appreciable assets,” he said in a recent episode of the podcast “What it Takes” from Unmoderated News. Cuban’s point is that people who own stocks see their net worths rise when share prices do.
The billionaire—Forbes estimates Cuban’s net worth at $6 billion as of today—said: “The way you’re going to reduce income inequality for anybody who works with somebody is making sure they get shares of stock.” And he wants to see more companies offering their employees stock-based compensation plans.
WHY THIS MATTERS TO YOU
The top 1% of people in the U.S. control much more of the country’s money than the bottom 50%—a yawning gap that has been growing for decades, according to Federal Reserve data.
Cuban said he has offered equity to employees at every company he ever sold, and referred to a New York Times report that SpaceX’s (SPCX) record IPO could make some 4,400 employees millionaires. SpaceX’s employee compensation program also inspired viral memes last month that imagine cafeteria workers and janitors as millionaires, and billionaires.
“So if you work at Tesla, if you work at SpaceX, when those stocks go up, your net worth goes up,” he said.
To be sure, SpaceX’s stock has fallen considerably below its IPO price, but shares in the company were gaining ground today and Wall Street analysts remain optimistic about potential upside.
Cuban said stock-based compensation programs should be voluntary, but that the U.S. government could incentivize more shops to roll out such programs with a lower tax rate.
According to the National Center for Employee Ownership, just 511 publicly traded companies out of thousands had such programs in 2023, the most recent year for which data is available.
What can be done for the folks who don’t work at companies that offer such plans? Cuban said: “Hopefully, if more people are seeing their net worth increase, then they’re spending more money. You know, they have a wealth effect, and that [will] impact other people as well.”
Read the original article on Investopedia
