Stock option or sticker shock? The Starbucks case.

Do stock options and equity sharing programs improve employee performance? Do they encourage complacency and stagnation? Are they evidence of quality management? Is their value purely emotional, or more complex? Are their benefits consistent across cultures?

The verdict is still out.

Whether or not to implement stock option and profit sharing programs is a tough decision. Supporters argue that they improve morale and give employees a personal stake in the company’s success. Opponents insist that they artificially inflate stock prices, allow employees to be lazy, and put businesses at risk for criminal prosecution.

Starbucks, the international coffee giant, has planted itself squarely in the “yes” camp. Their compensation packages, which they call “Your Special Blend,” offer a range of options for base pay, bonuses, benefits, and stock.

Starbucks’ direct purchase plan allows employees to buy stocks with a 5% discount off of the market rate. But the plan is more than financial. CEO Howard Schultz describes it as a method of ensuring that “people are respected and dignified in the workplace.”

“The worker on our plant floor is contributing great value to the company.” he says. “If he or she has low self-worth, that will have an effect on the company.”

Despite a few setbacks in recent years, Starbucks has grown to become the largest chain of coffeehouses in the world, with about 17,000 stores in 40 countries. In a highly competitive market where patents can’t protect products, this is no small feat.

While their direct purchase plan is less substantial than the company’s offerings in the past, it’s still substantially more than most of Starbucks’ competitors. By using stocks to drive employee buy-in and build a positive corporate culture, Starbucks wields a significant competitive advantage.

Or not.

The verdict is still out.