A Company for the Workers
James Adrian
      As a believer in free enterprise, I am very aware that socialism and centralized economic planning create disincentives for invention, productive work, investment and job creation; but many people are more impressed with the observation that free enterprise has been characterized by criminality, corruption, crony capitalism, extreme income disparity and the abusive political influence of the ultra rich. Well, its time that free enterprise cleaned up its act.

      Some small mitigation of all this evil might be found in a new kind of company:

      It is possible to create a company that is organized principally for the benefit of its employees. Such a company would necessarily be controlled by its employees as a group. In the example below, the traditional distinction between labor and management is abolished. Every employee is a worker.

      The board of directors is responsible for running the company. All authorizations of tasks within the company are either made by the board itself or are delegated by the board to employees of the company. The actions of the board are governed by the bylaws of the company and the laws of the land. Once the bylaws are adopted by the initial workers (the Board included), the bylaws may be change only by following the rules set forth in the existing bylaws. Board members may not vote to elect themselves or other board members.

      In most states, a company may be incorporated to conduct any legal business and need not state its every purpose and business aim in advance.

      In order to ensure that the direction of the company be controlled by the workers, it is advisable to encode certain policies in the bylaws.

      Any change in the bylaws will require the consent of three quarters of the stockholders owning voting stock.

      There shall be exactly two classes of stock - voting common stock and non-voting preferred shares.

      Every person employed five days per week by the company for a period of at least six months, whether full time or part time, will be issued voting stock in the company. Voting stock shall be issued by the company only to employees, and only for the work that they do for the company. Contractors will not be compensated with either kind of stock.

      Every employee of the company shall agree, as a condition of employment, to maintain ownership of at least one share of voting stock and to sell all shares in the company to the company when the employee's employment ends. These shares are to become partial payment for work to employees.

      All stockholders have the right to sell their shares; to propose policies; to receive dividends if they are declared by the board; to purchase new shares issued by the company; and they have the right to assets that remain after a liquidation.

      Holders of voting stock have the additional right to nominate and vote for directors.

      Shares of preferred stock have priority over common stock upon liquidation. The company's preferred stock is not convertible to common stock. Terms of the preferred stock are stated in a "Certificate of Designation".

      Preferred stocks are rated by credit rating companies. The rating for preferred stock is generally lower than ratings for bonds since dividends do not have the same guarantee as interest payments. Creditors have priority over preferred stock upon liquidation.

      Like common stock, preferred stock is traded on stock exchanges such as the New York Stock Exchange, provided the company has made a public offering.

      The company may not issue new shares of the company's stock to non-employees without the consent of three quarters of the stockholders owning voting stock.

      The company may not sell voting stock to non-employees. Non-employees are to be sold preferred shares only.

      If a director is also an employee of the company owning company voting stock or if that director otherwise owns voting stock in the company, that sock shall be paced in a blind trust for the duration of that director's membership on the board and for at least one year upon election to the board whether that director stays on the board for a full year or not.

      Nothing prevents the company from using contracted services extensively.

      Each employee shall be employed under the terms of a contract describing his or her work and compensation. This contract shall be between the company and that employee and shall be signed by all of the members of the board of directors.

      The greatest cash compensation paid per week to any employee of the company shall not exceed twenty times the least cash compensation paid to any employee of the company working 40 hours per week or more.

      The greatest amount of stock issued by the company in a given year to any employee of the company as compensation for work done shall not exceed twenty times the least amount of stock issued to any employee working 40 hours per week or more.

      There shall be at least five and no more than twelve directors.

      The board of directors shall hire a chief executive officer to conduct the day-to-day tasks of managing the business and shall hire a chief financial officer to oversee and report the financial aspects of the business.

      Don't overestimate the difficulty of financing the startup of such a company. A group can do more than any individual and a group will move mountains for a fair plan. Large amount of preferred stock can be made available for investment, but only when the workers agree to do so.

      It should also be noted that this kind of plan is within the rules of free enterprise. It creates incentives to do productive work. It respects the property rights of individuals. It provides an opportunity to earn a return on investment. It also rewards work with ownership and places the work force in control.

      An entirely different scheme having the same motives is available under the New York State Cooperative Corporation Law. See New York State Cooperative Corporations