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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

#211

Post by bofadeez »

claudiulodro wrote: post #207
bofadeez wrote: post #62

Earlier quoted context omitted.

Wages are not set by a company, they're set by the supply and demand of the market. Adding a minimum wage just criminalizes hiring anyone who is not productive enough to economically justify the minimum. It hurts unskilled poor people the most.

If people are working full time yet still in poverty, they will need government services like food stamps. In this scenario your tax dollars subsidize businesses that pay poverty wages. Wal Mart is the top employer of SNAP and Medicaid recipients. You would rather subsidize Wal Mart’s margins with your tax dollars?

I think the role of government is limited to that of protecting constitutional rights of citizens. People in impoverished countries live with extended family and share income and get along just fine. We shouldn't violate rights of individuals to facilitate a welfare program. That should be handled by families, communities, religious institutions, etc.

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

#212

Post by jimmytucson »

The company with the lowest median pay, Aptiv, I had to look up, and what a darling of a company this is:

    - guilty of systemic accounting fraud from 1999-2004
    - manufactured a (allegedly known-to-be) faulty ignition switch that led to the deaths of 124 people and injured 275 others
    - currently forcing 20,000 former employees to fight a decades-long legal battle for their earned pension benefits
    - gleefully dumps massive quantities of carcinogens and poisons into the environment, including: lead compounds, chromium compounds, sulfuric and hydrochloride acid (lol), and glycol ethers
Simply a masterclass in corporate irresponsibility, exactly why their CEO is so well comped.

Citations here: https://en.m.wikipedia.org/wiki/Aptiv

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

#213

Post by Aunche »

rchaud wrote: post #193
Aunche wrote: post #95

I'd likely be progressive if American progressivism wasn't so economically illiterate (as opposed to say Piketty). The vindictive themes make me think that it's motivated more by envy than a genuine desire to improve society. The CEO to worker compensation ratio is a useless metric. There is absolutely no reason why Starbucks should be punished for hiring more workers over a company like Nvidia that hires relatively…

You're conflating managerial economics with macroeconomics. CEOs at publicly traded companies aren't hired to enhance the long-term productive capacity of the firm ("growing the economy"); they're there to calm investor nerves and make the stock sexy. Those only have a very slight correlation to the overall health of the economy. Microsoft grew revenue and profits under Steve Ballmer, but the stock stayed flat, so he…

> If you asked a US economist whether they thought zero interest rate policy (2008-2022) was a good idea, they'd think you were talking about a communist society with a desperate government trying to manufacture growth.

I think you missed some words. Did you mean economists from the Cold War? By economic illiteracy, I don't mean economic opinions I think are stupid, but refusal to acknowledge economics altogether. If Milton Friedman rises from the dead, he could read the Fed's rationale for keeping interest rates low. He may vehemently disagree, but he would at least acknowledge there is an argument to be made.

On the other hand, there has been no thought whatsoever put into the implications of a tax that specifically targets companies with a exec to worker pay gap. There is no economic argument for why stock buybacks are bad for workers. There are arguments for why they're bad for investors, but somehow I doubt that the authors of the article are worried about those people.

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

#214

Post by WalterBright »

ethbr1 wrote: post #206
WalterBright wrote: post #171

Earlier quoted context omitted.

Keep in mind that executive compensation is at the expense of the shareholders, not the workers.

Yes and no. Executive compensation, from one perspective, is the mechanism via which shareholders align executive behavior in their favor, to the detriment of workers.

Worker pay is determined by the Law of Supply & Demand, not by the amount of executive pay. I.e. worker pay is determined by the minimum wage the worker will accept and the maximum wage the company is willing to pay. The latter figure is based on the value the worker will provide.

Executive compensation is not part of that equation.

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

#215

Post by WalterBright »

thrance wrote: post #188
WalterBright wrote: post #170

Earlier quoted context omitted.

> no one cares about the long-term anymore. Every shareholder does, because you cannot make a quick buck off of a stock if the other shareholders are looking for the quick buck as well.

You just have to not be among the last suckers to be left to hold the ball.

If there's even a hint that a company is sacrificing the long term for the short term, the stockholders will run for the exits. Share prices can tank before anyone is able to make a trade.

This is why professional investors spend awful lots of money on research into the companies they invest in. They're not stupid.

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

#216

Post by whoknowsidont »

Aunche wrote: post #200
whoknowsidont wrote: post #194

Earlier quoted context omitted.

>if American progressivism wasn't so economically illiterate Economists by and large tend to be academically and principally in support of many progressive positions so I'm not sure your statement can be read any other way than "I don't like perspectives that disagree with my primed and preconceived beliefs" Which is an exceedingly common phenomena in a post-truth world. But it's quite obvious; just want to point tha…

You assume that I'm conservative, but I'm not. I'm a Democrat who is growing increasingly concerned about their voting base demanding populism. AOC, Sanders, Warren are progressives. I don't consider establishment Democrats progressive.

I didn't say that. I responded directly to your own statement about not being a progressive and the fact that progressives are generally, implied by your words, economic illiterate.

Those were your words, not mine.

Whether you are a Democrat or any other party member is kind of irrelevant; although it certainly is amusing.

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

#217

Post by Aunche »

whoknowsidont wrote: post #216
Aunche wrote: post #200

Earlier quoted context omitted.

You assume that I'm conservative, but I'm not. I'm a Democrat who is growing increasingly concerned about their voting base demanding populism. AOC, Sanders, Warren are progressives. I don't consider establishment Democrats progressive.

I didn't say that. I responded directly to your own statement about not being a progressive and the fact that progressives are generally, implied by your words, economic illiterate. Those were your words, not mine. Whether you are a Democrat or any other party member is kind of irrelevant; although it certainly is amusing.

You made a lot of loaded assumptions, the most objectively wrong one being that I was conservative. "I'd likely be progressive if American progressivism wasn't so economically illiterate (as opposed to say Piketty)" means that I share similar values as progressives, but think that all of them in my home country are a joke.

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

#218

Post by araes »

missedthecue wrote: post #201
ninkendo wrote: post #174

Earlier quoted context omitted.

> The fundamental purpose of a buyback is not to raise the stock price. Make up whatever nonsense you want about the “fundamental purpose” of something, it doesn’t matter. The purpose of a system is what it does: https://en.m.wikipedia.org/wiki/The_purpose_of_a_system_is_w... Stock buybacks increase share price. There’s no reason to look any farther than that. The purpose of stock buybacks is what stock buybacks do.

They reduce sharecount. Not all buybacks increase share price. I can give you a thousand examples of massive buybacks that happened before the stock dropped considerably. But all reduce sharecount.

That's usually long term.

Searching on the subject of "buybacks where share price decresed", Google returns Merck as an example (reffing Harvard Business Review), which actually works quite well to illustrate. The HBR article even notes the main strategy "historically, companies that bought back their own shares have posted immediate returns between two and 12 percentage points above the market average"

"Merck's stock price dropped after a major buyback announcement when investors focused on expiring patents and a drying drug pipeline"

Except: Feb. 23, 2000, NYT, "Merck & Company, the No. 1 United States drugmaker, will buy back as much as $10 billion of its shares, which have fallen 18 percent this month." (Closest share price I can grab is 2/25/2000 at $57.39)

Share price then climbs steadily (tiny drop in July) up to a max at 12/29/2000 of $89.27 before finally crashing.

The first example Google returns is full of info on the stock behavior that makes it look like the stock buyback did not initially jack the price. Owners had 10 months to pull in a 55% share price increase before it crashed. And they floated through the 2000 March 10 bubble popping until the stock market really started deflating in 2001.

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

#219

Post by conradev »

ivewonyoung wrote: post #196
conradev wrote: post #130

Earlier quoted context omitted.

Fundamentally this is the corporation saying it doesn't have a market-beating way to reinvest this capital Isn’t that the crux of it, though? Running a company into the ground by not investing in growth or R&D? We give tax credits to corporations to incentivize R&D spending

That was considered a tax loophole by the last administration so the R&D exception was allowed to expire in 2022 and only recently restored by the new admin.

R&D tax credits did not “expire". Immediate expensing expired in 2022, requiring companies to split credits across multiple years. Multiple attempts since then have tried to restore expensing (often in bipartisan tax packages), but Congress hasn’t passed a permanent fix.

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

#220

Post by slashdave »

hollerith wrote: post #209
tw04 wrote: post #208

Earlier quoted context omitted.

>The job of a CEO is to maximize share price. It absolultely is not. That was an idea floated by Milton Friedman, and he was wrong with his ridicluous assertion. His justification wasn't even legally sound... https://www.forbes.com/sites/stevedenning/2013/06/26/the-ori... A CEOs job is to grow market share, increase the value of the company, and tend to its long-term health. All of which directly conflicts with "maxi…

What is the difference in your mind between maximizing share price and "increase the value of the company"?

Why do you equate the intrinsic value of a company directly to its share price?
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