Second, the program must have credibility and ownership. The third principle is that the competitive practice is only a control point. The program must be driven by the first two principles and then assessed in the context of what's going on in the real world, not only to control costs but to enhance the ability to attract and retain good people in doing the right thing for the business. In the final analysis, what the company can afford to do is what's going to drive the business, said Kuhns. In that context, the trick is spending the money very wisely and getting full value for the expenditure.
Equity can be a very good way to do that.
It puts management and the company in consonance with shareholder interest. Kuhns emphasized that equity as an incentive can produce change. The employee becomes an owner-investor, rather than a creditor. That' s an important difference. It's a powerful incentive and an important one for both parties to understand.