Why Company Stock Grants Are Bad for Workers

Stock grants offered by Starbucks and other companies to their workers are a scam directed against workers' interests. Instead of demanding more stock grants, workers should demand payment in higher wages. Experience shows clearly that stock grants weaken the fighting capacity of workers.

Some companies give stocks to their employees. These companies include Starbucks, Amazon, and Apple. Because workers at all three companies are now forming unions, the topic is naturally coming up: what is the significance of these grants of stock (or, to use the technical term, "Restricted Stock Units")? Are they good or bad for workers? Different people have different opinions on the issue.

For example, in his big return as interim CEO back in April, Howard Schultz talked up the "Bean Stock" program as a major benefit of working at Starbucks.

Another example is from 2018: Amazon got rid of stock awards, and attendance and productivity bonuses, while raising the minimum wage for hourly workers to $15. Amazon Labor Union has demanded the return of these awards and bonuses.

Lastly, in April, Apple workers in Atlanta who are unionizing with the Communication Workers of America also demanded access to stock options.

Our view is that company stock grants are not good for workers. Payment of the same amount of money in current wages is better. This might seem irrational to some workers, who might ask, "Who would not want us to make extra money from stocks?" However, it is a view supported by reason and history. 

Even if, at the present time, workers might have to "agree to disagree" here, all discussions on the topic are valuable because they go to the matter of what a union should be and what a union must do in order for workers to win a better life.

But, before getting into the "big questions"...

We can look at how "Restricted Stock Units" (RSUs) work.

Let's take the example of Starbucks: the "Bean Stock" RSU takes two years to "vest". That means, counting from the date of the grant, a worker must wait one year to receive the first half of the shares and two years to receive the second half. If a worker voluntarily leaves Starbucks, retires from Starbucks, or is forced by the company to leave for "misconduct" (... perhaps a claim arising from a hard-fought union campaign?), all unvested RSUs are forfeited.

Let's look at another example. Amazon had an even worse vesting schedule for workers: that is, four years to vest, on a schedule of 5% the first year, 15% the second year, 40% the third year, and 40% the fourth year (5-15-40-40).

As the business press says, offering RSUs is "good for the bottom line because it generates loyalty." By giving us the promise of a future windfall that is tied to the stock price of the company, management hopes workers will identify more closely with the company ("If the company does well, I'll do well") and be more easy to push around ("If I do a good job and wait, I'll get my shares in two [or four] years").

Rather than give us the mere promise of financial gain in the future, a promise that is doled out in pieces over a period of years, one that can be taken away at any moment, we say: pay us the same money in current wages now.

This is common sense and especially evident at a time when stocks, including SBUX and AMZN, have been tanking. Pay us with wages, not with lottery tickets.

However, there is more to say on the topic.

What is a union? Our belief is a union must be an organization of class struggle. Union leaders once knew this, but have renounced the idea after decades of sellouts.

What must a union do in order for workers to win a better life? To win, our unions must take up the weapon of the strike. This means to stop work across the company on the day and at the hour that the workers decide. Everything we get at the bargaining table depends on if we have organized ourselves up to this point.

Employee stock ownership is detrimental to both of these two union principles.

The history of Employee Stock Ownership Plans (ESOPs) is enlightening here. With an ESOP, a company creates a trust fund and puts money in the fund that is used to purchase shares of the company's stock. Workers receive shares of stock on a vesting schedule, as with RSUs. When workers retire, the company buys back the shares and workers receive money equal to the share price.

Driven by a similar logic as RSUs, workers have a long experience with ESOPs going back to the 1980s. During that decade, ESOPs were often used as "damage control", in the words of the AFL-CIO, in the context of threatened plant closures. In return for accepting lower wages, workers received ESOPs.

Experience shows that ESOPs, by tying the fate of workers to the profitability of the company, makes unions less demanding in negotiations, more likely to accept lower wages, and less likely to strike.

We in the RWU are not alone in our position. Also, check out, for example, the view of the United Electrical workers (UE), who reject ESOPs, saying that these are "schemes" "to trick workers into believing that the best way to improve their conditions is to work to improve the boss's profits, rather than fighting to get more from the boss" (Them and Us Unionism).

Company stock grants are bad for workers. Let's not be fooled by the bosses.