Hey friends!
Welcome to another edition of Aligned Incentives, the newsletter from ShareWillow.
Coming up this week:
NY Times dropped a huge article about how private equity is starting to share profits with workers without taking a financial hit 🤯
General Motors announced that their 45,000 workers will receive profit sharing checks up to $12,250 per person.
Delta announced a $1.4 billion profit sharing distribution to eligible workers.
American Airlines flight attendants are pissed at their 1.1% profit share after the carrier posted record profits.
NY Times: Private Equity Is Starting To Share With It’s Workers, Without Taking a Financial Hit
In 2018, Anna-Lisa Miller was working with agricultural cooperatives in Hawaii, helping them reinvest in their communities through shared ownership.
Ms. Miller, who had gone to law school and had planned to do civil rights litigation, loved the principle of workers partaking in the financial success of their employers, and the next year joined Project Equity, a nonprofit that helps small businesses transition to worker ownership. But it was slow going, with each transaction requiring customized assistance.
Then she came across an investor presentation from a different universe: KKR, one of the world’s largest private equity firms. In it, a KKR executive, Pete Stavros, discussed a model he had been developing to provide employees with an equity stake in companies it purchased, so the workers would reap some benefits if it was flipped for a profit. When all goes according to plan, KKR doesn’t give up a penny of profit, since newly motivated workers benefit the company’s bottom line, elevating the eventual sale price by more than what KKR gives up.
In 2021, the two met up to talk about the idea. By that time, Mr. Stavros had decided to start an organization to promote his model more broadly, hoping to reach the 12 million people who work for companies that private equity firms own. Ms. Miller saw it as a way to move much faster.
Go deeper: Check out the full New York Times article here (no paywall)
UAW members at GM to receive profit-sharing checks of $12,250
As a result of General Motors' yearly gains in profits, about 45,000 U.S. hourly workers will receive a profit-sharing check of up to $12,250, according to the automaker on Tuesday.
The before-taxes payout for GM's UAW-represented workforce is down slightly from the 2022 payout of $12,750, the highest since 2016 when it was at $12,000 per employee. In 2021, GM paid $10,250.
The GM-negotiated formula with the UAW for profit-sharing checks is $1,000 per every $1 billion in annual earnings before interest and taxes, or pretax profits for North America. For 2023, GM's North America pretax profits were $12.3 billion, down 5% from $12.9 billion a year ago. The checks are paid out in increments of $250, which is why it is $12,250 and not $12,300, GM spokesman David Caldwell said.
Read the full article here.
Delta People Earn Over $1.4 Billion In Profit Sharing
Sharing in Delta’s success is fundamental to the Delta culture - and there is no greater example of that than the airline’s profit-sharing payout.
Thanks to the collective hard work and resilience of Delta’s 100,000 people, eligible employees will receive their share of $1.4 billion in Delta’s 2023 profits, which will be paid out next month on Valentine’s Day.
Delta’s strong 2023 earnings and the profit-sharing payout are direct results of the exceptional work and commitment of Delta’s people throughout a challenging operational year.
Check out the announcement here.
American Airlines’ Measly Employee Profit Sharing
In the past couple of weeks, we’ve seen most major US airlines report their financial results for 2023. Among the “big three” US carriers, the results are exactly what you’d expect — Delta did best by a long shot, followed by United, followed by American.
Related to this, one interesting thing has been seeing how profit sharing differs at the major US carriers. American just announced the details of its employee profit sharing for 2023, and the numbers are leaving people very frustrated.
The exact profit sharing arrangement differs by work group, though the flight attendant profit sharing is perhaps the saddest, in particular compared to peers. Among the “big three” US carriers, here’s the profit sharing arrangement for flight attendants (with the percentage being in relation to eligible annual pay):
Delta flight attendants are getting 10.1% profit sharing
United flight attendants are getting 9.2% profit sharing
American flight attendants are getting 1.1% profit sharing
So yeah, Delta flight attendants are getting more than 9x as much profit sharing as American flight attendants, and that doesn’t even account for them having better pay to begin with (though American flight attendants are in the process of negotiating a new contract). So it sounds like most American flight attendants might be getting a check for a few hundred bucks, to thank them for a year of hard work.
Read the full article here.
Want to chat about how you can implement profit sharing?
Shameless plug but if you want to implement profit sharing at your company, book a call with me here.
Due to the high volume of requests, we’ve started doing plan design consultations. We will build you a custom profit sharing plan based on your business goals. You can learn more here.