Silicon Valley still dreams of the mythical equity culture — the notion that if you make your employees shareholders, magic happens. What it really does is make them as avaricious and obsessed with short-term gains as your average shareholder. Yahoo's owner-employees are as eager to unload their shares as the rest of the market — which means they've been abusing an employee stock purchase plan for quick cash.This explains why Yahoos have been fretting more than usual about the stock's plunging price. Yahoo's stock-purchase plan offers employees a 15 percent discount on shares; the price is set periodically based on market prices, and the discount taken off that. Monday was the most recent price-setting date; the company has a one-day waiting period before employees can sell shares. Hence the concerns that the stock not drop 15 percent in two days — which it nearly did, rendering even the instant profit from the discount void. It's legal for employees to sell after the one-day waiting period, but it's hardly in the spirit of stock-purchase plans. Yahoo's management is in a tough position: They can crack down on the share-flipping by putting in a longer waiting period, which might hurt morale; or they can allow it to continue, and thereby coddle employees who don't have the company's best interests at heart. What it really illustrates, though, is how the equity culture turns toxic when share prices tumble. The makeup of the human mind sets us up to treasure gains too little and fear losses too much; that means that employees take stock gains for granted, but fume when their options go underwater. When that happens, taking a company's 15 percent discount on stock and treating it like free money is just barely understandable. Employees should wonder why they ought to be the ones to buy and hold when it hardly seems like their company has a future. And shareholders should wonder why employees like these are getting free money. So much for aligning interests. (Photo by 42dreams)