A Blueprint for Durable Worker Ownership
Moving Beyond Symbolic Stock to Real Economic Participation
I. Executive Summary
Recent proposals to mandate employee stock ownership—most notably Mark Cuban’s call for federally required equity grants—correctly identify a fundamental problem: American workers are increasingly excluded from the wealth they help create. However, these proposals rely on a flawed instrument: ordinary common stock.
The core weakness is dilution. A company can issue shares to employees today and, through subsequent financing rounds, executive option pools, and stock-based acquisitions, reduce those workers’ proportional economic claim from 5% to 1% without any meaningful compensation. The employee still holds shares—but their wealth has been silently eroded.
This white paper proposes a superior alternative: the Employee Preferred Equity Act. Rather than mandating common stock distribution, this legislation would require qualifying companies to establish employee ownership trusts holding a special class of non-dilutable preferred equity.
The key distinctions are critical:
- Anti-dilution protection: Workers’ proportional economic claim follows the company as it changes and cannot be reduced by future share issuance.
- Economic rights, not voting control: Workers receive financial claims on corporate success without the governance complications of common stock.
- Collective trust ownership: The securities are held in trust with individual worker accounts, building on existing ESOP structures while redesigning the underlying security.
- Real valuation standards: Independent, federally standardized valuation prevents companies from manufacturing fake employee wealth through theoretical private-company pricing.
- Defined liquidity: Employees have clear mechanisms to monetize their stake upon retirement, termination, or corporate sale.
The goal is not to distribute stock certificates. The goal is to ensure that when a company becomes dramatically more valuable, the workers’ economic stake becomes more valuable too. This turns employee ownership from a slogan into an actual wealth-building institution.
II. The Problem with Simple Stock Mandates
A. The Dilution Trap
Under the normal corporate model, an employee can receive shares today and watch their percentage ownership shrink as the company issues new shares. The company raises another billion dollars, creates an executive option pool, or acquires another company using newly issued stock—and the employee’s relative economic claim diminishes. The paperwork still says they own stock, but their slice of the pie is now far smaller.
B. The Worthless Stock Problem
Private company stock often has no readily ascertainable market value. Companies can distribute shares with theoretical valuations that bear little relation to actual economic benefit. Employees may hold certificates representing nothing tangible until a liquidity event that may never occur—or that occurs at a valuation far below the paper numbers.
C. The Voting Distraction
Mandating common stock ownership inevitably raises questions about corporate governance and voting rights. This conflates two distinct issues: economic participation and corporate control. Workers need financial claims, not necessarily boardroom influence.
III. Real-World Evidence: The Dilution Crisis in Practice
Before examining the proposed solution, it is essential to understand that the problems described above are not theoretical. They are actively playing out in companies around the world today.
Case Study 1: FNZ — Employee Shareholders See $4.5 Billion in Value Eroded
Global wealth technology developer FNZ, which employs approximately 6,000 people across 30 countries, is facing a class action lawsuit from hundreds of disgruntled employee-shareholders. The basis of the suit is discontent over the firm’s preference share arrangement across three capital raise rounds.
Over an 18-month period, FNZ raised US$1.5 billion from institutional investors. As part of the terms, these institutional investors were guaranteed returns of up to two to three times over a two-year period, and their shares were ranked higher than employee-held shares. This arrangement effectively diluted the value of the employees’ holdings. The employee shareholders claim these capital raises diluted their class of shareholding by as much as US$4.5 billion (AU$7.1 billion).
Employees who previously held shares valued in the millions saw their holdings diluted to virtually nothing. A group of 215 employee-shareholders co-signed a letter criticising the arrangements, with concerns that their ordinary staff “class B” stock would be diluted. That number has since grown to more than 300 employees participating in the class action. Shareholders who are present and former employees represent the second-largest FNZ investor group, representing around one-third of the company’s shareholders.
An unnamed FNZ employee told BusinessDesk: “The relationship between the new management and key long-serving staff has broken down, and it’s getting worse every day this goes on”.
What this demonstrates: FNZ employees had equity on paper. But when the company raised new capital with preferential terms for institutional investors, their economic claim was silently eroded. This is precisely the dilution trap that the Employee Preferred Equity Act is designed to prevent.
Case Study 2: BrewDog — The Illusion of Employee Equity
In 2017, Scottish craft brewer BrewDog made headlines with a $1 billion “unicorn” valuation. Behind the celebratory press releases, however, was a complex financial structure that would leave thousands of employees and retail investors holding the short end of the stick.
Private equity firm TSG invested £213 million in BrewDog, acquiring preference shares with an 18% compounding return—one of the most aggressive quasi-equity terms ever seen. This wasn’t equity in the traditional sense; it was equity engineered to behave like debt, with a ticking time bomb embedded in the cap table.
Fast-forward to 2025: TSG’s original £213 million has compounded to over £800 million, giving it first priority in any sale or distribution. The likely enterprise value of the company today is circa £500 million—meaning there is effectively nothing left for others. The result:
- 130,000 “Equity for Punks” retail investors: Practically nothing
- Founders’ remaining ordinary shares: Deeply underwater
- Employees with gifted stock: Bye bye value
As the analysis concluded: “The compounding preference didn’t just dilute, it dominated”.
What this demonstrates: Employees were given shares and told they were owners. But because those shares were ordinary common stock layered beneath aggressive preference shares with compounding returns, they were economically worthless. “It shows how preference shares can silently erase ordinary equity value, especially for employees who enter the cap table with no seniority and no visibility”. The lesson: don’t confuse ownership with economics.
Case Study 3: M-KOPA — Anti-Dilution for Investors, Not Workers
Pay-as-you-go innovator M-KOPA faced a lawsuit filed in Kenya’s Employment and Labor Relations Court in May 2025, alleging that shareholding restructuring between 2019 and 2022 protected preferred shareholders from dilution with the creation of a new class of shares. The company was accused of crafting a shareholder scheme that allegedly protected global investors while shares held by employees of African descent were not similarly cushioned.
The board and majority investors allegedly designed a two-step “anti-dilution” plan that would see them tighten their control and protect their returns.
What this demonstrates: Anti-dilution protection is a well-understood and routinely implemented corporate mechanism—but it is almost exclusively reserved for investors, not workers. The Employee Preferred Equity Act would simply extend this same protection to employees.
IV. The Proposed Solution: Employee Preferred Equity Trusts
If the goal is to make workers participate in the wealth they help create, there is a much stronger way to accomplish it than simply telling companies to hand out stock options.
Give every employee a legally protected economic interest that cannot be diluted by future share issuance.
The basic idea is simple: every qualifying company would be required to establish an employee equity pool or trust holding a special class of preferred equity for its workers. But this would not be ordinary common stock. It would have several characteristics specifically designed to solve the problems demonstrated by the FNZ, BrewDog, and M-KOPA cases.
Six Key Features of the Proposal
1. Protected from Dilution (The Most Important Feature)
If the employee class is entitled to, for example, 5% of the company’s economic value, issuing additional shares to venture capitalists, executives, or other investors could not simply reduce that entitlement to 2% or 1%. The employee class would have anti-dilution protection written into the security itself.
The company could still raise capital, issue shares, and acquire other companies. But it couldn’t finance that growth by quietly shifting the economic burden onto employees. This distinction is crucial because otherwise an “employee ownership” mandate could become little more than a recurring distribution of paper shares that gradually become a smaller fraction of the business.
2. Preferred Economic Rights, Not Voting Control
The proposal does not need to turn every employee into a corporate politician. Employees don’t necessarily need to vote on every acquisition, elect directors, or participate in day-to-day corporate governance. What they need is a financial claim on the prosperity of the company.
The employee preferred security would provide:
- A defined participation in company profits or appreciation.
- Priority treatment over common shareholders for specified distributions.
- Protection against dilution.
- Clearly defined rights in a sale, merger, or liquidation.
- Transparent valuation rules.
- A mechanism for employees to receive cash when the company is sold or reaches specified liquidity events.
This separates the question of economic ownership from the question of corporate control, making the proposal far more practical.
3. Regulate the Economics, Not Dictate One Stock Percentage
Rather than saying every company must give workers 10% or 5% of its common stock, Congress could establish a minimum employee wealth contribution tied to payroll, profits, or executive equity compensation.
For example, Congress could require companies above a certain size to contribute an amount equal to 2% of total employee payroll annually to an employee ownership trust. Alternatively, companies could satisfy the requirement through a defined percentage of profits or equity compensation.
The important point is that employees receive a real economic claim, rather than a government-mandated number of shares whose value can be manipulated through dilution.
4. The Employee Trust Owns the Securities Collectively
Rather than giving every worker a tiny individual security that requires a mountain of paperwork, the company could create an employee ownership trust. The trust would hold the preferred equity on behalf of eligible employees. Workers would have individual accounts showing their accumulated economic interest.
This builds on structures that already exist in American employee ownership (ESOPs and employee ownership trusts), but redesigns them specifically around non-dilutable economic participation rather than simply owning ordinary employer stock.
5. Real Valuation Systems
This is essential. The government should not allow companies to say, “Congratulations, you received $20,000 in stock,” when that stock cannot realistically be sold for anything close to $20,000.
- For public companies: Valuation could generally be based on observable market prices.
- For private companies: The legislation would require independent valuation using standardized rules, similar to the concern already recognized in federal regulation of ESOP transactions.
The lesson is obvious: If Washington is going to mandate employee ownership, Washington also has to prevent companies from manufacturing fake employee wealth through meaningless valuations.
6. Share in Actual Corporate Success
The preferred security should not merely be a certificate saying that a worker owns something. It should have a defined economic payoff:
- Upon sale: The employee trust has a legally enforceable claim to its predetermined share of the transaction.
- Upon profitability: The employee class participates through dividends, distributions, or another clearly defined mechanism.
- Upon failure: Employees understand that their investment can lose value—that is honest ownership.
The difference is that the rules would make the employee’s economic claim real, transparent, and difficult to manipulate.
V. Companies Already Doing This: Real-World Precedents
The Employee Preferred Equity Trust is not a radical invention. Elements of this model already exist in successful companies around the world. These examples demonstrate that the proposal is practical, proven, and scalable.
Precedent 1: Publix Super Markets — The Largest Employee-Owned Company in America
Publix Super Markets is the largest employee-owned company in the United States. The company has a trusteed, noncontributory Employee Stock Ownership Plan (ESOP) for the benefit of eligible employees.
Key facts:
- Publix contributes stock to associates each year at no cost
- Employees have the opportunity to purchase additional shares of the privately-held stock
- The ESOP includes a put option for shares distributed from the plan, providing a liquidity mechanism
- As of September 30, 2023, the fair value of shares held by the ESOP totaled $11.1 billion
- The cost of shares held by the ESOP totaled $3.7 billion
What this demonstrates: A large, privately-held American company can successfully operate an employee ownership trust that holds billions of dollars in value for workers. The Publix model proves that collective trust ownership works at scale.
Limitation: Publix employees receive common stock, which lacks the anti-dilution protection that the Employee Preferred Equity Act would provide. Nevertheless, the trust structure itself is proven.
Precedent 2: Graybar Electric — 100% Employee-Owned Since 1929
Graybar Electric has been owned exclusively by its active employees and pensioners since January 1, 1929. The company’s common stock is 100% owned by active and retired employees, with no public trading market.
Key facts:
- Since 1928, substantially all issued and outstanding shares of common stock have been held by voting trustees under successive voting trust agreements
- At March 31, 2024, approximately 83% of outstanding common stock was held in the voting trust
- Graybar has authorized 10,000,000 shares of Delegated Authority Preferred Stock
- The company has an option to purchase shares from any shareholder who ceases to be an employee
- Cash dividends paid were $9.7 million for Q1 2024
What this demonstrates: Employee ownership through trust structures is not a new or untested idea. Graybar has operated successfully for nearly a century with 100% employee ownership. The company’s authorized preferred stock also shows that preferred equity structures are already part of the corporate toolkit.
Precedent 3: Carpenter Technology — Leveraged ESOP with Preferred Stock
Carpenter Technology Corporation has a leveraged employee stock ownership plan (ESOP) that uses convertible preferred stock.
Key facts:
- Carpenter issued 461.5 shares of convertible preferred stock in fiscal 1992 at $65,000 per share to the ESOP in exchange for a $30.0 million note
- As payments are made on the note, shares of preferred stock are allocated to participating employees’ accounts within the ESOP
- Each preferred share is convertible into at least 2,000 shares of common stock
- The preferred stock pays a cumulative annual dividend of $5,362.50 per share
- Preferred shares are entitled to vote together with common stock as a single class
- Participants are guaranteed a common share price of $32.50 per share upon conversion
What this demonstrates: The use of preferred stock in an employee ownership trust is not hypothetical—it has been implemented successfully by a publicly traded American company for over three decades. Carpenter Technology’s model proves that employees can receive preferred equity with defined economic rights, including dividends, conversion rights, and price guarantees.
Precedent 4: John Lewis Partnership — The Trust Model at Scale
The John Lewis Partnership in the United Kingdom is one of the oldest and largest employee-owned trusts in the world. The company has been wholly owned by employee trusts since 1950.
Key facts:
- The organisation has an irrevocable trust that provides that the whole of the profits on the ordinary shares shall go to the workers
- The whole of the ordinary capital is held by trustees for the benefit of all the workers
- New employees get shares that are held in the trust, which become theirs if they stay for a set time
- The trust owns a big part—or all—of the company on behalf of the employees
- Partners benefit as the company grows without having to manage shares individually
What this demonstrates: The trust model for employee ownership is not only viable but has been sustained for over 70 years at one of the UK’s most respected retailers. The John Lewis model proves that collective trust ownership can align employee and company interests over the long term.
What These Precedents Tell Us
| Company | Structure | Key Feature | Relevance to Proposal |
|---|---|---|---|
| Publix | ESOP trust holding common stock | $11.1 billion in ESOP assets; largest employee-owned company in US | Trust structure proven at scale |
| Graybar | Voting trust; 100% employee-owned | Operating since 1929; authorized preferred stock | Long-term viability of employee ownership |
| Carpenter Technology | Leveraged ESOP with preferred stock | Preferred stock allocated to employee accounts; conversion rights; price guarantees | Preferred stock in ESOP is already a proven model |
| John Lewis | Employee Benefits Trust | 70+ years of operation; trust owns company for employees | Trust model proven over generations |
The critical insight: Every element of the Employee Preferred Equity Act has been implemented somewhere, by someone, successfully. The proposal is not inventing new corporate structures—it is combining proven elements (trusts, preferred stock, ESOPs, anti-dilution provisions) into a coherent, federally mandated framework that ensures all workers benefit, not just those at companies that choose to be employee-owned.
VI. Implementation Framework
The Employee Preferred Equity Act of 2026
Congress could turn the concept into legislation with several basic requirements:
- Coverage: Companies above a specified size or payroll threshold must establish an employee ownership trust.
- Minimum contribution: Each year, the company must contribute a defined percentage of payroll, profits, or qualifying equity compensation to the employee trust.
- Universal eligibility: All qualifying employees participate under the same basic formula, subject to reasonable tenure and part-time-worker rules.
- Anti-dilution: The employee class receives contractual protection against dilution from future stock issuance.
- Preferred economic rights: The securities participate in specified dividends, distributions, and corporate-sale proceeds.
- Independent valuation: Private-company equity must be independently valued under federally defined standards.
- Liquidity: Employees must receive a defined mechanism for monetizing their accumulated interest upon retirement, termination, acquisition, or other qualifying events.
- Transparency: Companies must disclose the number and economic value of employee securities, dilution adjustments, and material changes to the employee ownership pool.
- Tax incentives: Companies exceeding the minimum employee ownership requirement receive additional tax benefits.
- Anti-avoidance rules: Companies cannot evade the requirement through subsidiaries, contractors, restructurings, or securities designed to provide nominal rather than meaningful economic value.
Critical Guardrail
The legislation must prohibit companies from replacing existing wages or benefits with the mandated equity contribution. The point is to add an ownership component to compensation—not disguise a pay cut as employee ownership.
VII. Scalable Design for Different Business Sizes
A universal mandate applied identically to a five-person business and a 50,000-person corporation would be unnecessarily blunt. Congress should establish thresholds:
| Business Size | Approach |
|---|---|
| Very small (< 50 employees) | Exempt or subject to simplified rules |
| Mid-sized (50-500 employees) | Standardized employee trust |
| Large corporations (500+) | Stronger requirements, greater disclosure |
| Public companies | Especially transparent valuation and reporting |
The objective is broad coverage without creating an administrative nightmare for the smallest employers.
VIII. Why This Is Superior to Simple Stock Mandates
The Crucial Difference: Ownership That Survives Corporate Engineering
Under Cuban’s framework, a company can give employees equity. But what happens afterward? The company raises another billion dollars. It issues new shares. It creates another executive option pool. It buys another company using newly issued stock. The employee still owns their shares—but their relative economic claim may have been dramatically reduced.
Under an appropriately designed employee preferred class, that cannot happen without compensating the employee class. The workers’ economic claim follows the company as the company changes. That is the key.
Comparison: Traditional ESOPs vs. The Proposed Trust
Many will ask: “Don’t we already have Employee Stock Ownership Plans?” The proposed Employee Preferred Equity Trust is fundamentally distinct:
| Feature | Traditional ESOP | Proposed Employee Preferred Trust |
|---|---|---|
| Mandate | Voluntary (employer chooses to create one) | Federally mandated for qualifying companies |
| Funding | Company buys existing shares or issues new ones | Company makes annual contributions based on payroll/profits |
| Dilution | No inherent anti-dilution; shares can be diluted | Contractual anti-dilution written into the security |
| Risk Profile | Employees own common stock (full downside, diluted easily) | Employees own preferred stock (priority over common, protected claim) |
| Valuation | Often opaque for private firms | Federally standardized independent valuation required |
| Purpose | Retirement benefit / tax-qualified plan | Current and future wealth-building economic participation |
Summary Comparison: Cuban-Style Mandate vs. Preferred Trust
| Issue | Cuban-Style Stock Mandate | Employee Preferred Equity Trust |
|---|---|---|
| Dilution | Shares lose proportional value | Protected economic claim maintained |
| Valuation | Often theoretical | Independent valuation required |
| Liquidity | Often unavailable until sale | Defined liquidity mechanisms |
| Voting | Governance complications | Economic rights separated from control |
| Tax Treatment | May create tax burdens | Tax-advantaged with incentives |
| Corporate Engineering | Employees bear cost | Economic claim follows company |
IX. Broader Benefits: Aligning Incentives and Strengthening Society
Beyond fixing the technical flaws of simple stock mandates, the Employee Preferred Equity Act generates profound benefits at both the corporate and societal levels. By giving workers a protected, non-dilutable stake in the upside, this policy transforms labor from a variable cost to be minimized into a shared asset to be cultivated.
A. Strengthening Corporate Alignment (Micro-Level Benefits)
1. Reduced Agency Conflict and “Us vs. Them” Dynamics
Traditional corporate structures pit owners against workers: management seeks to minimize labor costs, while workers seek to maximize wages and job security. This adversarial relationship breeds resentment, high turnover, and productivity friction. By giving workers a protected economic claim, the proposal aligns both parties around a single objective: maximizing sustainable long-term value. Workers stop viewing cost-cutting and automation as existential threats and start viewing them as efficiency tools that grow their personal wealth.
2. Fostering Innovation and Productivity
Empirical research on broad-based employee ownership consistently shows productivity gains of 4–5% in companies with meaningful employee stakes. When workers know that a new process improvement, a cost-saving initiative, or a breakthrough product directly increases their trust’s economic value—and that this value cannot be silently diluted away—they bring their full cognitive capacity to work. The proposal creates a genuine partnership in innovation.
3. Reduced Turnover and “Brain Drain”
The trust creates a powerful retention mechanism. As employees accumulate years of service, their accrued economic interest grows. Leaving the company means cashing out (or rolling over) that accumulated stake. This significantly reduces voluntary turnover, preserving institutional knowledge and cutting recruitment and training costs—which often run 20–50% of an employee’s annual salary.
4. Encouraging Long-Termism in Management
Because the anti-dilution feature prevents management from financing growth by devaluing workers, executives must think carefully about the quality of growth, not just the quantity. They cannot simply flood the market with new shares to fund a failing strategy without directly compensating their workforce. This adds a crucial check on short-term financial engineering and promotes patient, sustainable capital allocation.
B. Societal and Macroeconomic Dividends (Macro-Level Benefits)
1. Curbing Wealth Concentration Without Top-Down Redistribution
The most persistent economic challenge of the 21st century is the decoupling of productivity gains from median worker compensation. This proposal addresses that directly by turning workers into capital owners. Unlike tax credits or welfare transfers, which are redistributive and politically contentious, this policy builds new capital formation at the middle and lower ends of the income spectrum. It creates a nation of stakeholders, not dependents.
2. Economic Resilience and Stabilized Consumer Demand
When wealth is concentrated at the very top, consumer spending becomes volatile and fragile. The middle class drives 60–70% of GDP through consumption. By putting real, liquidable wealth into the hands of millions of employees, the policy broadens the economic base. Workers have nest eggs to draw upon during downturns, smoothing consumption and reducing the severity of recessions. A worker with $50,000 in protected equity is less likely to default on a mortgage or skip medical care during a job transition.
3. Reducing Political Polarization and Populist Backlash
Much of the current political anger stems from a legitimate feeling that the system is rigged—that workers do the heavy lifting while financiers capture the gains. If a critical mass of the workforce directly benefits from corporate success via a transparent, protected mechanism, the political demand for punitive wealth taxes, aggressive unionization mandates, or extreme regulatory crackdowns diminishes. Shared prosperity tends to produce shared political stability.
4. Fiscal Benefits for Government
The proposal improves public finances in three ways:
- Increased tax base: When workers cash out their equity upon liquidity events, they pay long-term capital gains taxes, generating substantial federal revenue without raising rates.
- Reduced safety-net reliance: Wealthier, more stable employees are less likely to draw on unemployment, food assistance, or disability programs during economic shocks.
- Reduced pension pressure: As workers accumulate private equity wealth, their dependence on underfunded state and federal pension systems decreases, relieving a massive long-term fiscal liability.
5. Dispersing Corporate Economic Power
Society benefits when economic power is dispersed rather than concentrated. Rather than funneling the majority of corporate equity growth to founders, VCs, and a tiny executive class, this proposal creates millions of new stakeholders who have a vested interest in the success of American enterprise. This depoliticizes corporate success—people celebrate a company’s IPO or acquisition because their neighbors, not just distant billionaires, benefit.
6. Creating a Cultural Shift Toward “Stakeholder Capitalism”
Finally, the proposal enshrines a practical version of stakeholder capitalism without the empty corporate PR. Companies are not merely asked to say they care about workers; they are required to structure their capitalization so that workers’ financial futures are interwoven with corporate performance. Over time, this cultural shift changes hiring practices, management styles, and even boardroom conversations.
X. Answering the Critics (Frequently Asked Questions)
Q: Won’t this anti-dilution protection scare away venture capital?
A: No. Venture capitalists routinely invest behind companies with preferred shareholder protections. They understand that anti-dilution clauses do not prevent raising capital; they simply prevent one class of shareholders (workers) from bearing the entire cost of future financing. VCs will still get their growth capital—they will just have to accept that employee economic rights are senior to common stock. This is fundamentally no different than existing VC preferences.
Q: Doesn’t this create an enormous accounting and valuation burden for startups?
A: It requires independent valuation, but this is already standard practice for private companies issuing equity compensation (409A valuations). The difference is that the government would standardize the methodology, reducing the current “wild west” of private valuations. For very small businesses, we exempt them or provide simplified safe-harbor formulas based purely on revenue or payroll multiples.
Q: How are employees taxed on this preferred equity?
A: To avoid immediate tax liability on illiquid assets, the legislation should adopt a deferral mechanism. Employees would not recognize taxable income until a liquidity event occurs (sale, IPO, or trust distribution). At that point, it would be taxed as long-term capital gains. This mirrors the favorable treatment already given to Incentive Stock Options (ISOs) and qualified ESOPs.
Q: What happens if the company goes bankrupt?
A: Honest ownership means sharing the downside. Preferred equity is still equity—it sits behind debt holders in the capital stack. If the company fails, employees lose their stake. However, because this preferred class is senior to common stock, employees would be paid out before founders, executives, and common shareholders in a liquidation. That is a materially better position than the common stock Cuban would give them.
XI. Phased Implementation Roadmap
Mandating this overnight would cause market chaos. A pragmatic federal rollout should occur in three phases:
- Phase 1 (Years 1-2): Federal Contractors & Public Companies. Companies with over 500 employees that hold federal contracts, or all publicly traded corporations, must comply first. These entities already have robust compliance and reporting infrastructure. This serves as a pilot.
- Phase 2 (Years 3-4): Large Private Corporations. Extend the mandate to privately held companies with annual revenues exceeding $100 million or payroll exceeding 1,000 employees. Provide a 24-month grace period for these firms to establish the necessary valuation and trust mechanisms.
- Phase 3 (Years 5-6): Mid-Sized Businesses. Apply the mandate to companies with 100–1,000 employees, but offer a “Simplified Safe Harbor” option where contributions are calculated purely as a percentage of total payroll, eliminating the need for expensive independent valuations unless a liquidity event occurs.
XII. The Core Elevator Pitch for Policymakers
When presenting this to Congress or regulatory bodies, the argument can be distilled into three incontrovertible truths:
- Wealth concentration is a systemic issue. Workers are increasingly excluded from the productivity gains they generate. This proposal directly addresses that without resorting to wealth taxes or income redistribution.
- It aligns incentives without distorting markets. Unlike a command-and-control mandate on wages, this allows companies to retain full operational flexibility. They can raise capital, pivot business models, and acquire competitors—they just cannot wipe out their workers’ stake when they do so.
- It uses market mechanisms, not bureaucracy. Instead of the government picking winners and losers (or setting arbitrary share percentages), the government sets the rules of the game—anti-dilution, transparency, and valuation standards—and lets the market determine the actual dollar values.
XIII. Conclusion
This proposal addresses the biggest weakness in the current debate around mandated employee ownership. Under a simple stock mandate, a company can distribute millions of shares and still create almost no economic benefit for employees. What matters isn’t the number of shares. What matters is the economic rights attached to those shares.
The real-world evidence is clear. At FNZ, employees watched $4.5 billion in value evaporate through dilution. At BrewDog, 130,000 retail investors and employees discovered that their “ownership” was economically worthless. At M-KOPA, investors received anti-dilution protection while employees did not. These are not isolated incidents—they are the predictable result of a system that allows corporate engineering to silently transfer wealth from workers to investors.
Yet the solution is not radical. Publix has operated a successful employee ownership trust for decades, holding $11.1 billion in value for workers. Graybar has been 100% employee-owned since 1929. Carpenter Technology has used preferred stock in its ESOP since 1992. The John Lewis Partnership has operated a trust model for over 70 years. Every element of the Employee Preferred Equity Act has been proven in practice.
Cuban’s instinct—that workers should participate when the companies they help build become enormously valuable—is worth taking seriously. But simply requiring companies to distribute shares doesn’t solve the underlying problem. Shares can be diluted. Options can expire. Private-company valuations can be theoretical. Common stock can be subordinated to other securities. Equity that cannot be sold may provide little immediate financial security.
A better policy focuses on economic rights rather than stock certificates.
If America wants workers to become capitalists, it should give them something more meaningful than a few shares whose value can disappear through dilution or a failed startup. Give them a protected claim. Give them transparency. Give them a path to liquidity. And most importantly, make sure that when the company becomes dramatically more valuable, the workers’ economic stake becomes more valuable too.
We are not asking the government to give workers money. We are asking the government to give workers durable leverage—a seat at the economic table that cannot be silently removed by corporate financing tricks. That is the difference between a symbolic handout and a genuine structural reform.
A Final Caveat on Terminology
Throughout this paper, we call the proposed security “anti-dilution protected” rather than promising that the number of shares can never be diluted. A company can still issue new capital; the legislation must ensure that the employee class’s economic entitlement is adjusted or protected when that happens. This is much more legally and economically defensible.
Sources
- U.S. Department of Labor, Employee Benefits Security Administration, ESOP and Employee Ownership Trust Guidance
- U.S. Department of Labor, Valuation of Privately Held Employer Stock
- FNZ class action proceedings (Financial Newswire, 2025)
- BrewDog preference share analysis (Burges Salmon, 2025)
- Publix Super Markets SEC filings (Form 10-Q, Q3 2023)
- Graybar Electric SEC filings (Form 10-Q, Q1 2024)
- Carpenter Technology SEC filings (Form 10-K, 2006)
- John Lewis Partnership trust documentation