As of: April 15th, 2025

Motivation & Philosophy

The traditional for-profit model often prioritizes shareholder returns above other considerations, sometimes leading to practices that negatively impact employees, customers, communities, or the environment. Non-profits, while mission-driven, face limitations in funding and operational scalability.

The “Not-for-Large-Profit” (NFLP) structure offers a third way: a for-profit entity fundamentally committed to moderation, sustainability, and equitable value distribution. It recognizes profit as essential for health and growth but caps excessive accumulation. The core philosophy is that businesses should create lasting value for all stakeholders – employees, customers, shareholders, the community, and the environment – operating responsibly and focusing on multi-generational sustainability rather than short-term, maximized gains.

Guiding Principles

  • Stakeholder Balance: Decisions prioritize the well-being and fair treatment of employees, customers, community, and the environment alongside reasonable returns for shareholders.
  • Sustainable & Responsible Growth: Focus on building a resilient, enduring business through responsible financial management, ethical practices, positive environmental and social impact, innovation, and long-term value creation.
  • Equitable Wealth Distribution: Ensure that the financial success of the company is shared fairly among those who contribute to it, particularly employees.
  • Long-Term Stewardship: Foster a culture and implement practices that prioritize the company’s health and positive impact for future generations over short-term financial results.
  • Transparency & Accountability: Operate with openness regarding financial performance, compensation structures, environmental and social impact, and adherence to these guiding principles.

Core Regulations

These regulations form the binding commitments of an NFLP company:

  1. Maximum Compensation Ratio & Living Wage Floor: The total annual compensation (including salary, bonuses, equity grants, and other benefits) of the highest-paid individual cannot exceed 15 times the total annual compensation of the lowest-paid full-time employee. Furthermore, the compensation for the lowest-paid full-time position must meet or exceed the calculated living wage for the relevant geographic location. This ratio and floor must be reviewed and reported annually.
  2. Universal Employee Ownership: All eligible full-time employees will participate in an employee stock ownership plan (ESOP) or equivalent equity program after a defined vesting period. This plan may exist solely while the employee is employed by the company.
  3. Minimum Employee Stock Pool: The collective pool of equity reserved for employees must constitute at least 15% of the total company shares. This pool should be managed to ensure ongoing availability for new and existing employees. The company may decide how to allocate the pool between their employees.
  4. Maximum Shareholder Concentration: No single individual, entity, or closely affiliated group of entities may own or control more than 40% of the company’s voting shares.
  5. Profit Margin Cap: The company’s operating profit margin (or another clearly defined profit metric) shall generally not exceed 20% over a rolling three-year average. Profits exceeding this target should be strategically reinvested into the business (R&D, infrastructure, resilience), distributed to employees (bonuses, benefits, well-being funds), used to lower customer prices, allocated to community or environmental initiatives (supporting regulation #7), or used to strengthen long-term financial stability.
  6. Executive Compensation & Performance for Long-Term Stewardship: Tying Compensation to Long-Term Metrics: A significant portion of executive variable compensation (bonuses) must be calculated based on achieving multi-year strategic goals and sustained performance metrics (financial and non-financial, including environmental/social targets where applicable), not solely on short-term financial results. Mechanisms like deferred bonus payouts over multiple years may also be used.
  7. Emphasis in Performance Management & Strategy: Leadership performance evaluations and the company’s strategic planning processes must explicitly incorporate progress towards long-term objectives and adherence to NFLP principles.
  8. Clawback Provisions: The company shall implement clawback provisions allowing the recovery of executive incentive compensation if subsequent discoveries reveal that performance achievements were based on inaccurate information, misconduct, or resulted in significant long-term harm to the company or its stakeholders.
  9. Mandatory Environmental Targets: The company must set specific, measurable, ambitious, and time-bound targets for reducing its key environmental impacts (e.g., greenhouse gas emissions, waste, water usage) aligned with sustainable practices. Progress against these targets must be tracked and reported publicly.
  10. Comprehensive Stakeholder Impact Reporting: The company must publish an annual, publicly accessible “Stakeholder Impact Report.” This report will detail performance against all NFLP principles and regulations, including, but not limited to: the verified compensation ratio and living wage compliance, employee ownership statistics, profit margin performance and use of any excess profits, progress on environmental targets, community contributions, and other relevant ESG (Environmental, Social, Governance) metrics.

Additional Recommendations

While not explicitly required under NFLP regulations, companies can choose to take additional action as part of their commitment to responsible practices.

  • B Corp Status: Formally registering as a Benefit Corporation (where legally available, such as potentially exploring compatible structures recognised in Panama or internationally) can legally embed the commitment to broader stakeholder value.
  • Stakeholder Representation in Governance: Consider structures for formal stakeholder input or representation on the Board or advisory committees (e.g., employee or community representatives).
  • Ethical Supply Chain Standards: Implement requirements for key suppliers regarding ethical labor practices and environmental responsibility.
  • Customer Protections: Define clear principles around fair pricing, data privacy, and product/service quality beyond legal minimums.

The “Not-for-Large-Profit” model is designed for building thriving companies that are both profitable and principled. By integrating these regulations, the NFLP structure provides a robust framework for businesses committed to financial health, ethical operations, long-term stewardship, and creating lasting, equitable value for all stakeholders and the planet.

Disclaimer

This remains a conceptual framework. Implementing this structure requires careful legal and financial planning, tailored to the specific legal environment of your jurisdiction. Consultation with legal professionals experienced in the corporate law of your region is essential to draft the necessary articles of incorporation, bylaws, shareholder agreements, and compensation policies to ensure these principles are legally binding and practical.