[Iftheshoefits]

If the "Principal/Architect's" equity grant affords him a definitive say in the direction of the company, then he's an owner, not a worker. If it doesn't, then the grant is indistinguishable from an ESPP with a larger discount, in terms of raw compensation, and any hours he works over 40 is unpaid (i.e. 'free' work).

With respect to #2: A raise is not, in fact, compensation. It's a promise of future compensation based on future work. Calling it anything else is, frankly, less than honest.

[throwaway092834]

Any equity stake is improved by work in the company. Your argument seems to be that the work isn't sufficient, but you're not being clear about where you draw the line.

WRT #2, the impact on income when viewing a career over a long period of time is clear. It appears you're being dishonest by refusing to acknowledge this rather obvious fact. You can say "it's not compensation" until you're blue in the face but at the end of the day people who do more will on average earn more.

[Iftheshoefits]

I think the line is somewhat blurred, but I object to the notion that I'm not being clear: if the equity stake doesn't give a person the same, or comparable, authority and take of the profit as "major" shareholders, the person is an employee, not an owner. To take one specific case as an example, if a person can be fired by the "real" owner/equity holders, he's not an owner. So the "Product Manager" in your example, if he doesn't get paid for every hour he works, is working for free for some hours, regardless of the particulars of the ESPP program he's participating in.

You're conflating "compensation in year N+1" with "being paid for hours worked in year N." The compensation you're talking about is dependent on work done in year N+1, and is not some sort of "back pay" or "built in, amortized pay" for the work done previously.

A simple example may help illuminate what "working for free" means in the context of this discussion.

1) You earn $1000 per week in salary compensation. 2) You work 45 hours during a given week. 3) You are paid $1000 for work done that week.

It doesn't matter whether you get a raise the next week, or what the amount of the raise is. For the week you already worked you contributed 5 hours of unpaid, free labor to your employer.

[gjm11]

Surely what matters is the overall, effective, relationship between work done and money received.

Consider the following "toy model", which is of course a deliberate oversimplification. Everyone starts at a salary of $10000/year, in exchange for which they are required to work 40 hours per week. If you choose, you can work 50 hours per week instead (all year), in which case your salary the next year will be 10% higher.

In this model, all the compensation-or-not-whatever-you-want-to-call-it you get for working extra hours is in the future, and does indeed depend on your working in the future. Just as you say.

On the other hand, someone who works 40 hours a week every week for 10 years gets $100k and someone who works 50 hours a week every week for 10 years gets almost $160k.

I don't think the fact that the compensation is in the future and subject to uncertainty makes it any less real. Imagine that it works this way instead: When you work extra hours one week, you get "paid" a token. If you collect enough tokens, you can exchange them for a salary increase. It seems clear to me that these tokens have value (would you rather have 100 of them than 50? Yes? Then they have value), and therefore being given them in exchange for doing extra work is a form of compensation.

Of course in the real world you don't know that your extra hard work will lead to a salary increase, and you don't know you'll still be working at that employer to take advantage of it. So let's say that those tokens are exchangeable, once you have enough, for stock options instead of salary increases. Again, clearly compensation (though you might choose to be skeptical about how valuable it is) and uncertain in very much the same ways.

It is, for sure, true in a sense that for the extra-hard week you just worked you contributed some "unpaid, free labor to your employer". But you probably did it with the understanding that it would, on balance, lead to your employer paying you more in the future (either in recognition of your productivity and commitment to the company, or on account of being more successful through your efforts, or both). The difference between this and real unpaid work is much the same as the difference between lending someone some money (when they might just run away with it and never repay you) and giving it to them.

Now, if you weaken your claim a little and say that extra work is generally very badly paid, I'd be much more likely to agree.