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CEO pay and stock buybacks have soared at the largest low-wage corporations

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Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#41

Post by JumpCrisscross »

arthurcolle wrote: post #38
missedthecue wrote: post #22

Earlier quoted context omitted.

Stock buybacks were never illegal. Stock buybacks were how Buffett took control of a small textile mill called Berkshire Hathaway in the 1960s. What was not allowed was at-the-market buybacks in the open market. Corporations had to do tender offers at a fixed price, usually well above market price, in order to attract sellers to mail in their certificates. I'm not sure why that is necessarily better or helps anyone,…

I think they are actually bad because it enables messing with stock price in a way that is "explainable" when really it is just a bookkeeping exercise

> when really it is just a bookkeeping exercise

…that’s what a share of stock is.

Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#42

Post by m00x »

fakedang wrote: post #35
bruceb wrote: post #7

This from an advocacy group with a clear agenda. But if they wanted to raise wages they could just advocate for less immigration and robust enforcement. Restrict supply, wages will rise. But they don't.

Doesn't matter here. The examples cited here are Starbucks and Ulta Beauty, neither of which are big on hiring illegal or foreign workers.

What? Almost every Starbucks I visit hires foreign workers.

Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#43

Post by hnlmorg »

happyopossum wrote: post #2

> 100 S&P 500 corporations with the lowest median worker pay So not necessarily “low-wage” corporations, just the lowest quintile from a very small group.

There’s plenty of low wage corporations in the S&P 500 index.

It’s certainly not enough of a cherrypicked group to warrant dismissing their findings.

Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#44

Post by missedthecue »

arthurcolle wrote: post #38
missedthecue wrote: post #22

Earlier quoted context omitted.

Stock buybacks were never illegal. Stock buybacks were how Buffett took control of a small textile mill called Berkshire Hathaway in the 1960s. What was not allowed was at-the-market buybacks in the open market. Corporations had to do tender offers at a fixed price, usually well above market price, in order to attract sellers to mail in their certificates. I'm not sure why that is necessarily better or helps anyone,…

I think they are actually bad because it enables messing with stock price in a way that is "explainable" when really it is just a bookkeeping exercise

Messing in what way? They are buying from willing sellers at the market price, using funds that are announced well before hand in public government filings (Form 10-Q and 8K) are to be used to buyback shares

Sure, bids hitting the orderbook theoretically keeps a stock price higher than the counterfactual where the bids did not exist, but it's simply urban myth that failing companies can keep their stock price high over the long term with buybacks. The math doesn't pencil out.

Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#45

Post by FredPret »

Hikikomori wrote: post #24
missedthecue wrote: post #9

Measuring median wage of Starbucks employees against the one time multi-year strictly performance based stock-option plan given to the new CEO is so blatantly dishonest I can barely read the rest of the article. Especially when Starbucks awards stock and healthcare plans to even part time baristas. Probably one of the better major employers of low skill labor in the world.

Is part of the performance keeping worker wages as low as possible?

You're not asking this in good faith, but I'll give my answer anyway: companies have an interest in paying workers market wages, not more, and not much less.

Too much over the market rate, and you're not maximally efficient at converting economic inputs into larger economic outputs.

Too much under the market rate, and you'll see increased employee churn, leading to all sorts of other problems.

If you want workers to be paid more, as we all do, even us greedy capitalists, their economic productivity has to go up (not the same as working harder).

The best way to do that - as far as I know - is improving technology and education.

Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#46

Post by LordDragonfang »

So perhaps someone can explain something to me.

One of the main problems I see with modern Corporatism is that "shareholders" have too much influence over companies, driving them to make choices that erode long-term customer trust and brand value in return for short-term gains. (This is rational from the investor POV, because they can sell their stake at any point and still have made a profit on the dead husk of a company they left behind). Put more briefly, being beholden to shareholders drives enshittification.

Stock buybacks should, in principal, allow a company to dilute shareholder power and re-control its own destiny. It should allow a company that is successful enough to not need external investment anymore to re-prioritize what's good for the company, rather than the shareholders, especially once they've reached the point of having enough free cash to not need investors. Why, then, is it so universally reviled?

Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#47

Post by necubi »

nielsbot wrote: post #10

Stock buybacks used to be illegal. It's a loophole way of paying employees at a lower tax rate than salary. HBR discusses some downsides of buybacks: https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for...

Buybacks are just a more tax-efficient way to issue dividends to shareholders (dividend issuance is a taxable event and at short-term rates, buybacks raise the stock price and those gains aren't taxable until you sell, at which point it may be long-term cap gains).

It's reasonable to be upset about the fact that this is arguably a tax dodge! But all of the other criticism of buybacks apply equally to dividends which no one seems to get upset about. Fundamentally this is the corporation saying it doesn't have a market-beating way to reinvest this capital, and it's giving the money back to its owners to more productively invest.

Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#48

Post by 01HNNWZ0MV43FF »

fakedang wrote: post #29
tyleo wrote: post #6

It’s interesting to me this doesn’t self correct. I’d love to know if someone can explain why. E.g. presumably companies can pay people more if they capture less value themselves. Why can’t a company do that and just hire the best talent?

Because the "talent" in this case is a commodity. Most of the low-wage corporation's employees tend to be front-of-house customer facing staff or brown-collar labor, which in most cases does not require any special skill set, nor rewards exceptional talent in most companies. Jobs that are easily replaceable and does not require a degree holder. Ironically, one of the few places I've seen that actually rewards employe…

Brown collar? All I found for that is military https://en.wikipedia.org/wiki/Designation_of_workers_by_coll...

Re: CEO pay and stock buybacks have soared at the largest low-wage corporations

#50

Post by flockonus »

nostrademons wrote: post #8

It’s entirely possible that this is causal ABs deliberate, ie the reason why boards of these companies have approved large CEO pay packages is so that the CEO will align themselves with the shareholders paying them rather than the workers working for them and cut wages so the money can be returned to shareholders as buybacks.

Google up "CEO fiduciary duty" - that's very much within the definition of a CEO role.
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