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

Post by NoahZuniga » Thu, Aug 21, 2025, 11:19 PM UTC

CGMthrowaway wrote: post #54

csours wrote: post #25

I'm not sure how to phrase this, so please be patient and try to understand what I intend to say. CEO pay relative to median employee pay has soared since the 1970s. That is, a CEO may be paid $10,000,000 vs the median employee at $70,000 (arbitrary numbers), where before 1970 the numbers may have been $150,000 and $20,000 Using only one set of numbers can be deceiving though. For instance, through mergers and acquis…

As a thought experiment, consider what it would take to make CEO pay gap even BIGGER, in addition to stock-based comp* and buybacks, which are mentioned in headline. Here's what one might do: - Reduce unions - Outsource and automate labor - Slow minimum wage increases - Consolidate power via M&A (you mentioned this) - Cut back on benefits like healthcare, pensions and paid leave - Promote "guru culture": indispensabl…

Post by shortrounddev2 » Thu, Aug 21, 2025, 11:19 PM UTC

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…

Post by missedthecue » Thu, Aug 21, 2025, 11:21 PM UTC

NoahZuniga wrote: post #100

missedthecue wrote: post #80

Earlier quoted context omitted.

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 th…

capital gains tax (selling for a higher price) is lower than income tax (getting dividends)

Post by johnecheck » Thu, Aug 21, 2025, 11:22 PM UTC

whatisthiseven wrote: post #93

simianwords wrote: post #57

Earlier quoted context omitted.

Yeah pretty much.. but this is a good thing. Companies should focus on improving profits and not wages.

Are there studies that show a causal relationship between higher CEO pay and profits? Do buybacks cause profits to increase? Maybe from what I can see? But long-term? If all we care about is short-term then that will lead to the continued financial cannibalization of the US economy. Where private equity firms buy companies and destroy them for short-term profit while loading them with the debt used to buy them. I thi…

Post by simianwords » Thu, Aug 21, 2025, 11:23 PM UTC

whatisthiseven wrote: post #93

simianwords wrote: post #57

Earlier quoted context omitted.

Yeah pretty much.. but this is a good thing. Companies should focus on improving profits and not wages.

Are there studies that show a causal relationship between higher CEO pay and profits? Do buybacks cause profits to increase? Maybe from what I can see? But long-term? If all we care about is short-term then that will lead to the continued financial cannibalization of the US economy. Where private equity firms buy companies and destroy them for short-term profit while loading them with the debt used to buy them. I thi…