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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

#71

Post by nitwit005 »

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.

There's no plan. CEO salaries have just crept up steadily.

If anything, they're paying CEOs so much in some cases that the rational thing for the CEO to do is as little work as possible. Why work hard if you'll get enough to retire comfortably on regardless of your performance?

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

#74

Post by missedthecue »

simoncion wrote: post #66
missedthecue wrote: post #31

Earlier quoted context omitted.

No. If keeping worker wages as low as possible was the goal, they wouldn't award stock or healthcare benefits to part time workers in their kitchens. The point is that poaching a new CEO from another company (in this case, Chipotle), and awarding him a pile of stock options if he hits certain metrics is not pay, is not comparable to W2 income, does not hit his bank account, and does not make anyone else poorer, excep…

> ...awarding him a pile of stock options if he hits certain metrics is not pay, is not comparable to W2 income, does not hit his bank account... Are you certain that they are options , and not RSUs? The bonus plan described in the SEC filing [0] seems to indicate that the stock offered is not options. My RSUs absolutely counted as wages once they vested, and I was absolutely able to turn them into cash in my bank ac…

Good question. Options was casual nomenclature. He received PSRUs, which are Performance-based Restricted Stock Units. For him they vest through 2027 depending on if his hits the metrics or not. Failure to hit means no vesting at all.

Some of his metrics are about store renovations, revamping the rewards program, and hitting some internal financial operating ratios, and a couple other things.

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

#75

Post by tracker1 »

I kind of wish stock buybacks had to include an equivalent portion of executive and board shares (bought back) and options (reduced). It may raise the value of remaining shares, but at least it would reduce the use of the decision to drain value from the public and the company itself.

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

#76

Post by vpribish »

nielsbot wrote: post #52
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,…

According to Forbes they were > For most of the 20th century, stock buybacks were deemed illegal because they were thought to be a form of stock market manipulation. https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-...

forbes is not a source of information. it used to be a real source of journalism but now is worthless

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

#77

Post by [deleted] »

mnky9800n wrote: post #60
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.

Do you have an iPhone? Mine is constantly turning “and” into “ABs” when I type with swipe.

[deleted]

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

#78

Post by slashdave »

Inequity is a real thing, but I am confused about why the CEO of a company that consists primarily of low wage earners deserves a lower compensation for that reason alone. If you follow this logic to extremes, the compensation of a CEO of a company of a dozen people earning 100,000 should be higher than one with with tens of thousands of employees earning 30,000.

Not all businesses are the same.

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

#79

Post by qq66 »

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?

Talent quality doesn’t really matter outside of the bottom 20% and the top 5%

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

#80

Post by missedthecue »

necubi wrote: post #47
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…

But the buyback involves buying from sellers. Why don't the sellers of the shares owe tax? Don't see how that's a tax-dodge.

The fundamental purpose of a buyback is not to raise the stock price. The purpose of a buyback is to reduce the amount of outstanding shares, which makes every existing owner own an increased percentage. If a company buys back 10% of its stock, each long term shareholder now owns 10% more of the company. Over the long term, steady buybacks increase shareholder value this way, but the purpose of it isn't to slam the order book and juice the price. That's counterproductive, because you'll buy fewer shares at higher prices, and within a trading day, the market will push the price back to normal anyway.

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