The Check That Resets

Profit sharing solved transparency forty years ago and stopped there.

E2, Foundation track — Part 2 of 3

I ended the previous essay by saying that the company had no organ capable of registering what I heard on the floor. No line on the P&L. No field in the system. No metric anyone was held to.

That is a design fault, not a moral one. Design faults have solutions. This essay is about what the solution has to do.

I. The best argument against me

Start with the strongest case that none of this is true.

The frontline worker in an American auto plant has held a formal, transparent, contractual claim on the value he helps create for 4 decades. It is called profit sharing, and it is better built than most people realize.

The GM–UAW formula is mechanical and published: $1,000 for every $1 billion of North American pretax earnings, paid in increments of $250, to any employee with 1,850 or more compensated hours in the year. Ford’s works the same way. There is no discretion in it. There is no committee. A man on the line at Lansing Grand River can read the quarterly earnings release, do the arithmetic on his phone, and know what is coming before the company announces it.

So the objection writes itself. He does have a claim on value. It is auditable. He can see the number.

I want to concede this completely, because the concession is where the argument gets made.

General Motors signed a document decades ago stipulating that the men and women on its floors hold a legitimate claim on value they helped create. That principle is not in dispute. It has never been in dispute. I am not here to argue for a new principle. I am here to argue that the principle was settled in the wrong instrument.

II. 4 properties

Profit sharing fails to build wealth, and it fails for 4 structural reasons, none of which is anyone’s bad faith.

It is collective, not individual. The check is indexed to the company’s regional pretax earnings. Not to his line, his yield, his scrap rate, or the 4 points of first-pass yield he pulled out of a process last quarter. Two men on the same shift — one who transformed his station and one who did not — receive identical checks.

It is a flow, not a stock. A check, not a balance. There is no account. There is no statement. There is nothing that has a value on a Tuesday in March.

It resets annually. Nothing compounds. Nothing accumulates. Nothing transfers to a child. 40 years of participation leaves precisely the asset position of 1 year: none.

It is indexed to what he cannot touch. Tariffs. A fire at a supplier’s aluminum plant in New York. An electric-vehicle strategy decided in a room he will never enter. The formula is honest. The inputs are entirely outside his hands.

III. February, in full

Watch what those 4 properties produce across 3 years.

For 2024 performance, about 47,000 GM workers received up to $14,500 — the largest payout in the program’s history.

For 2025, announced this January, the figure was $10,500. Down 32 percent, the lowest since 2021, because North American pretax profit fell 28 percent to $10.4 billion.

Ford’s workers received up to $6,780, down from $10,208, paid March 12 — hit by roughly $2 billion in tariff costs and a supplier fire that stalled F-Series production.

Stellantis workers received nothing. For the first time since the merger formed the company, the minimum thresholds were not met. The company lost $26.3 billion.

I never received one of these checks. Profit sharing is an hourly instrument and I was salaried management, so what I can report is not what February felt like. It is what February looked like from where I stood.

I usually learned the number the way the floor did. From the papers.

Then I would walk the line and say something about it. Congratulations on the payout. The responses sorted into a small number of shapes, and after enough years I could predict which one was coming.

When the figure landed below the maximum, I heard about the goalposts. Management had set targets nobody on that line could influence — electric vehicle volume was a favorite example, and a fair one — and then paid out against them. The word that came up was dishonest.

When the maximum hit, I got a smile.

If I probed past the smile it went one of 2 ways. Either I deserve a lot more than this for what I do for you, or I’m using it to pay down my debt.

What I almost never heard was a plan. Very rarely a vacation. Very rarely a purchase somebody had been waiting on. Almost never anything that would still exist in 5 years. I am reporting an absence across many Februaries rather than counting anything, and I want that stated plainly.

Now hold those 3 responses against the 4 properties.

The goalpost complaint is the fourth property, stated by the people it lands on. They were not wrong. EV volume was decided in rooms none of them would ever enter, and their February depended on it.

I’m using it to pay down my debt is the wage arriving already spoken for, one more time, at a larger number.

And I deserve a lot more for what I do for you is the closest thing to a claim I ever heard on a factory floor in 36 years.

Notice what it is missing. It has direction and no magnitude. It is a sense of desert with no figure attached — made, every February, to the one man in the building who had the figure on his desk and never once thought to bring it down to the line.

That is the best instrument the American frontline has ever been given. Transparent, contractual, negotiated by a union at the height of its leverage. And after 40 years of it, a 55-year-old in Lansing owns exactly as much of anything as he did the day he hired in.

IV. Somebody already solved half of it

Here I have to be fair, because the most serious answer to this problem did not come from a union, or a policy institute, or from me. It came from private equity.

In 2015 KKR bought C.H.I. Overhead Doors, a garage door manufacturer in Arthur, Illinois. At acquisition, all 800 employees — people in the factory, people driving trucks, people in the corporate office — were made owners of the business. It was free. It was incremental. It was explicitly not traded against wages or benefits, and wages rose 7 percent in 2020 and 12.5 percent in 2021 anyway.

Over 7 years, EBITDA rose nearly fourfold organically. Margin climbed more than 1,400 basis points, from 21 percent to well over 30. Revenue grew roughly 120 percent. The improvements came from procurement, scrap reduction, labor productivity, working capital.

Read that list again. That is not a finance story. That is a plant.

In 2022 KKR sold C.H.I. to Nucor for $3 billion, roughly 10 times invested capital. Hourly employees and truck drivers averaged about $175,000 on their equity, on top of some $9,000 in dividends over the holding period. The most tenured cleared more than $750,000. An office manager with 17 years took home 5.5 times her annual salary.

Pete Stavros, who runs KKR’s Americas private equity platform and drove the program, was asked why a buyout firm would do this.

“This isn’t charity, it’s not a gift.”

He went on to say that the workers drove an enormous amount of productivity in the business.

I have been making that argument for years. He was making it from the other side of the table, with a 9.8x multiple to prove it. The strongest current proponent of the capability argument is a private equity co-head, not a labor advocate. If you want to know whether this is a business strategy or a moral appeal, that is your answer.

V. And why it still isn**’**t the answer

Now the hard part, and I have to hold myself to the standard I set in the previous essay.

That office manager received 5.5 times her salary because KKR exited at nearly 10 times invested capital in the first quarter of 2022. Same woman. Same 17 years. Same work. Move the exit to 2009 and she receives nothing.

That is the Mracek problem in a better suit. I spent an essay establishing that wealth produced by timing is not earned wealth. I cannot arrive here and applaud wealth produced by timing because this time the beneficiary was on the floor.

Broad-based equity fixes the most important of the 4 properties. It is a genuine stock. It compounds. It transfers to a child. That is real and it is not a small thing.

But it keeps 2 of the others and adds a new one.

Still collective. You are paid for the enterprise’s outcome, not for the capability you formed.

Still timing-contingent, and now event-contingent. Ownership Works — the nonprofit Stavros founded, now working with Apollo, Ares, Silver Lake, TPG and others — describes payouts as arriving within roughly 5 years, tied to events such as a sale. Which means the frontline worker’s wealth now requires that his employer be sold. Consider what that asks a man to hope for.

And the base rate is not the headline. Across the 41 liquidity events in the Ownership Works portfolio to date, the 20 completed exits have averaged about $55,000 per employee-owner. That is real money and I do not want to diminish it. It is not $175,000. C.H.I. is the ceiling, not the median.

Concentration. His employer now holds his job and his savings. That is the objection the ESOP literature has fought over for 40 years and it has not gone away.

So: profit sharing is a flow that resets. Equity is a stock that requires a sale. Neither is indexed to the thing the man actually did.

What is missing from both is attribution and portability. A claim tied to the capability he formed rather than to his employer’s exit multiple. An account that travels with him, because the capability travels with him.

VI.

I have been looking for an instrument that does both, and I have not found one in the field.

Profit sharing solved transparency 40 years ago and stopped there. Broad-based equity solved the stock problem and tied it to a sale. The ESOP solved ownership and locked it until 59½. Every one of them is better than nothing and not one of them puts an asset in the hands of a 38-year-old who improved a process last quarter.

The next essay describes what I think such an instrument has to do, what it costs, and the 2 questions in it I cannot yet answer.

I would genuinely prefer to be told it already exists. If you know of one — any sector, any country — that attributes to the individual, holds as a stock, and travels at separation, write and tell me. I would rather adopt than build.

Part 3 of 3: **A Deposit Is Not a Payment** — what the instrument has to do, and what it costs.

Sources

UAW–General Motors national agreement, profit-sharing formula.

General Motors, Ford Motor Company and Stellantis 2025 results and profit-sharing announcements, January–March 2026.

KKR, sale of C.H.I. Overhead Doors to Nucor Corporation, 2022.

Pete Stavros, interview, CNBC, May 2022.

Ownership Works, impact reporting, 2026.

Venki Padmanabhan is a co-founder of the Capability Capital Institute and the author of the forthcoming Built to Extract and Already Paid For (Capability Capital Press). He writes at thelonggameforall.substack.com.

Written with AI assistance. The argument, the judgments, and the floor testimony are the author’s own.