One of the big issues here is that once employees start selling common stock, the strike price of the options can no longer be set at a large discount to the latest valuation as it can when the only transactions are the preferred stock shares that are sold when the company raises money from VCs.
One of the most attractive things about employee stock options is that the strike price is often set at 30-40% of the valuation of the latest financing round. So a company that just raised (preferred) money at a $500m valuation can give their employees options with strike prices around $200m or less. Therefore, the employee can believe that they have a "locked-in" gain day one.*
If employees sold their common shares at anywhere near fair value at the same time the company was raising the round, they would likely sell at a price between $400m-$500m a very slight discount to the preferred shares. Any future option grants given would have to have a strike price reflective of these recent common-stock transactions, and companies would no longer be able to use the low strike prices of options to attract employees.
Obviously, this is just one trade-off among many and in no way means that companies shouldn't allow more sales of employee common stock over time, but its worth understanding the many reasons companies currently are resistant to doing so as much as individual employees would like.
*Obviously, common shares should be priced at a discount to preferred shares but almost everyone I've talked to in the VC/startup community believes that the 60-70% discount applied is extremely generous as it implies that up 60-70% of the value the VCs investment is in downside protection (ie the debt-like element) rather than upside potential (ie the equity-like element), a pretty nonsensical amount for a high-risk, asset-light VC investment.
I agree it sucks for anyone to lose their job, but using that as an excuse for xenophobic policy is a non-sequitur.
Do you honestly think there would have been a national uproar against Disney if they'd asked their employees to train other Americans?
Try replacing "foreign H1B worker" with "person of another skin color" and see if your arguments don't sound abhorrent. If you think the later sounds racist, the former is xenophobic.
>> it's always some anonymous others who will pay
Couldn't agree more. In the case of immigration and labor policy, the anonymous others who pay are those that didn't have the good fortune to be born in this country.
>> Private companies have a greater motivation to maximize profits than public entities do.
Corrections officers unions have strong motivations to keep prison populations high as well and unions tend to be stronger in the public sector than the private sector so its not obvious that private prisons increase the aggregate political pressure for high prison sentences.
This seems like a serious inversion of cause and effect. Our problems with prisons pre-dated the growth in private prisons and private prisons remain a small fraction of the overall prison industry so its hard to see how private prisons could be the primary source of the problem.
Is there any reason to believe that private prisons are significantly worse than publicly run prisons?
I agree that the U.S. is badly in need of major reforms in its criminal justice system, but is there any reason to believe that society is better off with exclusively publicly run prisons?
Private prisons may do some regrettable lobbying on behalf of longer prison sentences, but I'm pretty sure that the corrections officers unions (most of whose membership works in publicly run prisons) is a far stronger political force.
It seems as though the students' activist energy would have been better used fighting the policies of mass incarceration rather than the private companies who do the government's bidding in applying them.
Why should hiring managers be required to give you preferential treatment vs. someone born in a much poorer country who happens to be willing to do the same (or, likely, better) work for a lower cost?
Its a cute fact that you and the hiring manager were both lucky enough to have parents who lived in the U.S. when you were born, but that doesn't make you a better or more worthy person than someone born in a poorer country. (You already have access to a stronger social safety in the form of unemployment, social security, subsidized healthy insurance, etc if you find yourself unable to compete with foreign talent.)
The idea that some people should be considered more worthy than others by our society just because of where they were born or who there parents are is the definition of xenophobia and racism.
You should read up on the literature on brain drain. In addition to your comment being morally abhorrent ("people born in poor countries should be forced to stay there and fix shit so people born in rich countries don't have to deal with it") its also not well supported by the facts. Giving people the chance to get high returns from their education incentivizes a much larger group of people to invest in their education than end up leaving the country.
Given that the same worker ends up making 2-3x in a developed country what they would with their exact same skills in a poorer country and ends up sending much of that extra money back in the form of remittances, immigration is generally a positive force for those "left behind" (not to mention those who immigrate).
Maybe not, but even if not, why are you so sure that would be bad?
Let's say the foreign workers would have made the equivalent of $20k in their own country but will now make $60k for Disney in the U.S. vs. the American workers who made, say, $80k but will now end up settling for new jobs that only pay $60k (in addition to their unemployment, social security and subsidized health insurance and other social safety net features that the foreigners wouldn't have access to in their home countries). Are you really sure this is a bad thing for the world?
(By the way, the stylized figures above are very generous to your anti-immigration case, since while there is plenty of evidence that immigrants 2-3x their incomes by working in the U.S., there is no reason to believe that American's actually suffer 25% income losses to do competition from immigrants. Most studies show no change or a positive impact to native workers' wages and the few that show a negative impact show at most a ~5% decrease.)
Why does your cost-benefit calculation not include the benefits to those foreign workers who are allowed to compete for jobs in the U.S.?
The academic literature* shows much, much larger productivity and income gains to those who migrate to richer countries than any negative effect to native workers. Even if an influx of immigrants depressed some existing Americans' wages by a small amount, that delta would only pale in comparison to how much better of the immigrants would be.
Do you oppose efforts to educate more American's as computer scientists? This too would "depress" the wages of existing computer scientists but you would (hopefully) find it abhorrent if someone used your "wage depression" logic to stop teaching CS in inner-city schools.
Unless you think that the lives of non-American's are not worth considering, these hugely positive impacts of immigration should be part of your calculation.
I'd be open to hearing your criticism of policies that allow Disney to have [American] workers train their foreign replacements that don't invoke any sort of xenophobia or racism.
The whole idea that it would be wrong or humiliating to have to train someone who had the gall to be born in a different (and generally poorer) country is based on the notion that Americans should be treated with more regard than people born elsewhere. If Disney had fired 200 Americans and replaced them with 200 other Americans, would there have been an uproar? Almost certainly not. Since they only difference is the new workers' nation of origin, how is this not a xenophobic or racist reaction?
Lots of issues are complex but complexity is not an excuse for xenophobia.
One of the most attractive things about employee stock options is that the strike price is often set at 30-40% of the valuation of the latest financing round. So a company that just raised (preferred) money at a $500m valuation can give their employees options with strike prices around $200m or less. Therefore, the employee can believe that they have a "locked-in" gain day one.*
If employees sold their common shares at anywhere near fair value at the same time the company was raising the round, they would likely sell at a price between $400m-$500m a very slight discount to the preferred shares. Any future option grants given would have to have a strike price reflective of these recent common-stock transactions, and companies would no longer be able to use the low strike prices of options to attract employees.
Obviously, this is just one trade-off among many and in no way means that companies shouldn't allow more sales of employee common stock over time, but its worth understanding the many reasons companies currently are resistant to doing so as much as individual employees would like.
*Obviously, common shares should be priced at a discount to preferred shares but almost everyone I've talked to in the VC/startup community believes that the 60-70% discount applied is extremely generous as it implies that up 60-70% of the value the VCs investment is in downside protection (ie the debt-like element) rather than upside potential (ie the equity-like element), a pretty nonsensical amount for a high-risk, asset-light VC investment.