A salary is a promise made in advance. Profit is different. Nobody knows what it will be until the year is over, and in most companies, when it finally arrives, it belongs to the shareholders. FairShare would give it to the people who did the year’s work, through an instrument called a Future. This chapter defines the Future, shows how it is earned, valued and paid, and sets it beside the stock options it replaces.
What a Future is
A Future is a claim on one year’s profit. It carries the year it belongs to: a 2027 Future is paid out of the 2027 pool and out of nothing else. Every 2027 Future is identical. Each pays the same amount on the same dates, whoever holds it. The name is meant literally, since each one is a claim on a profit that has not been counted yet.
A Future is not a share. It carries no vote, a Future earned through work cannot be sold or handed to someone else, and once its year has been paid out it is spent. Ownership of the company sits with the trust described in Chapter 11.
How Futures are earned
Every person on the payroll earns one Future for each scheduled working day. In the example company the working year is 200 days, so a full year earns 200 Futures.
- Paid leave counts. Holidays, sick days and parental leave earn Futures like any other scheduled day. A model that cut someone’s profit share for being ill would undo its own argument.
- Part-time work counts in proportion. A half day earns half a Future.
- A day is a standard day. Chapter 8 defines it, eight hours in the example company. Scheduled time beyond it earns Futures in proportion, so a scheduled twelve-hour shift earns one and a half. Only scheduled time counts.
- Hard conditions shorten the day and leave the Future whole. Where the council has set a shorter standard day for night work or dangerous work, that day earns a full Future.
- Duty credits count. Time credited for a duty under Chapter 13 earns Futures like any other scheduled time.
- Joining and leaving are counted to the day. Someone who joins on July 1 earns Futures from July 1. Someone who leaves on June 30 keeps every Future earned up to that date.
Band makes no difference to the count. Salary already pays for mastery, which is the subject of Chapter 8. Futures pay for something else. The year’s profit was made by the whole company, the way a chord is made by the whole hand, and no method of dividing it among individuals survives inspection. Chapter 5 makes that case through the cost of a vacancy: the role that looks cheapest on a salary survey can be the one whose absence stops everyone else. So the profit is divided by the one measure that is equal and countable for everybody, which is a day of work.
This rule has a cost, and it should be stated. A principal engineer and a new hire in the lowest band earn the same profit share. Their salaries can differ by three times. Their Futures do not differ at all. Some will find that unjust. It is what follows from admitting that nobody knows who made the profit.
What a Future is worth
One sum sets the value of every Future for the year:
\text{value of one Future} \;=\; \frac{\text{net income} - \text{reserve}}{\text{all Futures for the year}}
Net income is the audited figure for the year, after every cost, including salaries and tax. Chapter 16 explains why the tax has to be worked out together with the pool.
The reserve is the part of net income the company keeps to reinvest. The council sets it as a percentage before the year begins. Fixing it in advance matters, because nobody can then look at a good year and decide afterwards to keep more of it back. And once anyone has paid for a Future of a given year, the percentage for that year can be lowered but never raised.
All Futures for the year means those earned by the workforce plus any held by investors.
In the example company, 2027 ends with $30 million in net income and a 30 percent reserve. The workforce earned 50,000 Futures and an investor holds 2,500.
\frac{\$30{,}000{,}000 - \$9{,}000{,}000}{52{,}500} \;=\; \$400
Someone who worked the full year holds 200 Futures and receives $80,000. The pool divides like this:
| Holder | Futures | Payout | Share of pool |
|---|---|---|---|
| Workforce | 50,000 | $20,000,000 | 95.2% |
| Investor | 2,500 | $1,000,000 | 4.8% |
Without the investor’s Futures, each would have paid $420. That $20 is what the capital cost the workforce in 2027. Chapter 12 covers when that cost is worth paying and how the council caps it.
Nobody knows a Future’s value until the accounts close, but anyone can estimate it. The company publishes two numbers through the year: Futures issued to date and net income to date.
If net income is zero or negative, the pool is empty and that year’s Futures pay nothing. Salaries are unaffected and no one owes anything back. Chapter 15 follows the example company through such a year.
When a Future is paid
Half of the payout arrives as a lump sum on January 1. The other half arrives in twelve monthly instalments through the same year. In practice the lump sum is paid as soon as the year’s accounts are closed, and the instalments run for twelve months from then. The unpaid half is moved to an outside custodian in the meantime, so the company cannot spend it. Chapter 12 describes that arrangement.
For 200 Futures from 2027:
| Date | Payment |
|---|---|
| January 1, 2028 | $40,000 |
| Each month, January–December 2028 | $3,333 |
| Total | $80,000 |
In a company that makes a profit every year the pattern repeats, and all of one year’s payout arrives during the next.
Nothing in this schedule depends on staying. Take someone who leaves on June 30, 2027, having worked 100 of the year’s 200 days. Their monthly instalments from 2026 continue to December 2027. Their 100 Futures from 2027 are worth $40,000, paid as $20,000 on January 1, 2028 and $1,667 a month through December 2028. Their last payment arrives eighteen months after their last day at work.
A common alternative makes part of the payout conditional on staying. FairShare does not, because a payment that can be forfeited is a vesting cliff under another name, and Chapter 4 argues against those. People have a different reason to stay: next year’s Futures are earned only by working next year.
Futures held by investors
An investor’s Future is the same instrument. It belongs to a named year, it pays the same amount as every other Future of that year, and it is paid on the same schedule. The differences are in how it is acquired. An investor pays for it, and buys it for a later year than the one in which the money goes in.
One consequence reaches everyone else. Investor Futures count in the denominator of the sum above, so each one sold reduces what every other Future pays. Chapter 12 covers the price, the cap, and Futures bought by founders and staff.
Does sharing profit work?
FairShare as a whole is untested. Profit sharing is not. A 2020 meta-analysis pooled 355 estimates from 56 studies and found that profit sharing is associated with higher productivity on average, and that it works better where employees also take part in decisions.1 That is evidence for one component of the model. It says nothing about equal shares per day, which this paper has not found studied.
Notes
- Doucouliagos, H., Laroche, P., Kruse, D. L., & Stanley, T. D. (2020). Is Profit Sharing Productive? A Meta-Regression Analysis. British Journal of Industrial Relations, 58(2), 364–395. https://doi.org/10.1111/bjir.12483