When a company cannot offer competitive market salaries, employee participation can bridge the gap. This is especially useful in the early stages of a business or during financial crises. For example, providing employees with a stake in the company could help attract and retain talent even if immediate financial resources are limited.

Example: Sharetribe – founder and early employee shares

Within their golden share model, Juho and Antti sought a way to compensate for the early risks, investments, and years of little or no salary endured by the founders and early team members. To address this, founder and early employee shares (D-shares) were included in the company’s statutes. These D-shares do not carry voting rights but do have a redemption right similar to investor shares. The redemption schedule for D-shares follows a waterfall model, prioritizing the redemption of investor shares first, providing additional security and accountability for investments. Founder shares are also part of this redemption-based exit model. The company will allocate a portion of its profits for D-share buybacks, but only after all investors have recovered their original investments. Moreover, Sharetribe is limited to using only 10% of its yearly profits for D-share buybacks as long as any outstanding C-shares remain. This structure ensures that team members receive most of their "deferred compensation" only after the investors' C-shares have been fully redeemed.

Employees can also play a valuable role in strengthening the company’s financial foundation – for example by becoming investors themselves. In some cases, they may even contribute to the capital needed for the transition to steward-ownership in the first place. By sharing not only in the purpose but also in the company’s success, employees might even feel more connected and motivated to help the organization thrive. 

Example: Bio Verlag – profit participation certificates

BioVerlag introduced participation certificates ("Genussscheine") for all employees to not only facilitate BioVerlag’s transition to steward-ownership – replacing the founders’ initial equity with new capital – but also to ensure that responsibility and value creation would be distributed more broadly across the workforce. Each employee's financial participation is determined by factors such as working hours and responsibility, with managing directors making the largest financial contributions (“investments”). While the return on each investment is capped at the principal, dividends paid on participation certificates are not. However, the majority of the company’s profits are directed towards charitable causes, with only a portion allocated to certificate holders as dividends. While permanent employees are required to invest in the company, this investment doesn’t need to happen immediately and can be built up over time through methods like salary conversion. Upon leaving the company, employees have their initial investment returned. The longer employees stay, the more they benefit from profit-sharing, enhancing retention and ensuring they are both financially and ethically invested in the company’s future.

Participation can also be a way to recognise and reward collective success – through bonuses, profit-sharing, ESOPs, or other financial instruments. These tools can help align everyone’s contributions with the company’s development and create a sense of shared achievement. When employees are both financially participating and stewards of the company – and if equity-like instruments are used with a more open approach to limitation on returns (i.e. returns are not limited by amount or time, but by influence or ending the investment) – make sure to have clear structures and safeguards in place. In these cases, it becomes relevant to ensure that the people exercising control can independently, free from personal financial and external incentives, decide what is best for the company. To do so, mechanisms should be in place that prevent a conflict of interest and maintain the integrity of steward-ownership.

Example: Organically Grown Company – multi-stakeholder approach

At OGC, employees are next to investors one of the five key stakeholder groups represented in the Trust Protector Committee, which ensures that the company fulfills its mission and operates in the interests of all stakeholders. To balance the financial interests of all stakeholder groups, OGC has come up with the following approach: Preferred equity investors receive a base cumulative dividend, meaning unpaid dividends roll over to the following year. Investor dividends are paid before any other profit distributions, as workers and growers have already received their basic salary. Excess profits are distributed among stakeholder groups based on a predefined split: investors share in profits when the company performs well, with dividends potentially doubling or more. However, investors do not extract an disproportionate share of profits. After reaching a predefined dividend percentage, 60% of additional profits go to other stakeholders, with 80% allocated thereafter.

Example: Globus - silent partnerships

A key part of Globus’ philosophy is the involvement of employees, with around 10,000 team members participating as silent partners. The silent partnerships are structured as profit participation loans, with a minimum holding period of six years. Employees have the flexibility to contribute at their own pace, with no permanent obligation to make recurring payments. To qualify, employees need to have either a permanent employment contract or a fixed-term contract of at least one year. Participants receive a base interest rate on their investment, and when the company performs well, they earn an additional bonus interest. Silent partners share in the company’s profits but are shielded from losses. If the company faces negative operating margins, both the base and bonus interest can drop to zero. However, silent partners are only liable in the event of insolvency, and even then, their liability is capped at the amount of their initial investment.

Example: Neue Narrative - pool of shares

For Neue Narrative, one thing is clear: a company should belong to the people actively working in it and taking responsibility for its success. This connection between ownership and responsibility ensures the business can consistently contribute positively to society. To uphold this, they’ve developed a steward-ownership structure with four share classes. Ownership is primarily held by an employee partnership (GbR), which controls 99% of the voting rights. Membership in the GbR is exclusive to current employees, with decisions made through the consent principle, following the Holacracy Constitution. Alongside non-voting C-shares for investors, they issue non-voting D-shares to founders and employees, recognizing prior contributions such as unpaid work. While D-shares function similarly to C-shares, they are subordinate in repayment priority. These D-shares also allow Neue Narrative to attract talent by offering equity to individuals whose full salaries cannot yet be paid.