High salary doesn&#x27;t align interests.<p>If I&#x27;m the board of directors, I care about profit. I care about dividends on equity.<p>If I&#x27;m an employee working for cash, I care about cash.<p>Yes you can argue that smart employees will realize that revenue and ultimately profit leads to more available cash which leads to continued employment and salary, but that&#x27;s an indirect effect.<p>Of course you can also say that most employees don&#x27;t understand equity or why they should care about it, so granting equity alone doesn&#x27;t align incentives.<p>Arguments can be made in both directions. I think it&#x27;s an interesting debate actually.<p>I&#x27;ve come down on the side of granting equity and encouraging employees to understand their grants so that (hopefully) incentives are more aligned than at the average company.<p>An alternative way to get a similar result is to give a bonus based on company performance I think.