I must be thick, but I fail to understand how shareholders are "investors" of a publicly traded company? Yes, at some point, the company went to the market, and large sums of cash were exchanged for company shares, with the promise of a future return of part of the profit on that share. So yes, that moment could be seen as an investment.
But from that point onward, holding a share of a traded company has nothing to do with investment. Share holders are exchanging shares on the stock market, but at no point is any of that money going back to the companies they are trading shares of. They are just exchanging the "profit sharing promise" among each other, with no positive financial impact on the companies whatsoever. Quite the contrary, as they eat up a huge quantity of the available net profit, that could have been reinvested in the companies themselves.
IPO creates the “public market investment vehicle” by liquidating the assets of the private equity holders onto retail investors.
In single share class companies then, the entirety of the “value” from a financial perspective is held in stocks and corporate bonds. Whomever owns these, has voting and control rights in a way that non-voting equity holders do not.
Notably almost no public companies give voting shares to employees- I’m sure there are examples but incredibly rare.
Shareholders benefit materially from the labor of the company by holding the asset that (theoretically) accretes value with no actual labor inputs.
That means that anyone doing labor is paying the shareholders from their paycheck every month.
Why is it like this, because the contracts people sign and the egregious power disparity makes it such that capital, the voting share holders, have ALL of the value that they can turn trade or liquidate or whatever because they gave money for shares and more shares means more power in the company. The board ultimately encourages this because they are only interested in capital returns and stock price.
Totally valid question I struggled with for years.
Simply yes, the most of the investment happens when shares are issued - notably the IPO. However companies can issue new shares, or buy back/retire shares and reissue at a future date. The value from people holding shares maintains the price for which companies can cash in at a future date. So demand for shares on the market is sort of a store of value for companies.
Your question on reinvestment: a company is under no obligation to return profits to shareholders and can reinvest as much of their profit as they please. Amazon did this for years. Of course there are practical limits to this as board members often are representatives of shareholder interests. When a company no longer can make new credible investments, they are likely to return excess profits to shareholders. Different companies have different mandates from shareholders and different levels of scrutiny for what counts as credible reinvestment.
Now in practice there is the added layer of shares representing the interests of the make up of the firm. Board seats often are shareholders, creditors give preference to firms with valuable shares, Ceos are often paid in shares as sometimes employees at many firms.
Ultimately, there is no legal claim to profits from shareholders, nor is there legal claim to control. (Look at Google's multi class share obfuscating control). However giving profit and control helps stoke share price which is the store of value for firms as well, helps maintain access to credit/ financial strength, and represents the interests of the firm itself (via its board, creditors, CEO, employees etc.)
TLDR: companies issue /reissue new shares to finance their business. Maintaining share price stores value for business (and new demand builds that value)
“How to transfer ownership of all publicly traded shares such that they are owned solely by the employees and not non-employee investors”
CEOs and management are simply there to prevent the above from happening, which is why they are paid by the board so much.
The boards are the unelected non-employee owners that need to go away