It’s equal to almost $8,700 per full-time Walmart employee.[i]
It’s more than three times what taxpayers spend each year on health care, food stamps and other forms of public assistance for Walmart employees.[ii]
It’s 50% more than Walmart’s total profits last year.[iii]
It’s equal to about half of the company’s total long-term debt.[iv]
And Walmart directors have decided to spend all that money buying back shares of their own corporation’s stock. Which doesn’t really do anything other than condense corporate ownership.
2005 photo of the Rev. Billy Talen leading the “Stop Shopping Choir” by J.L. Sousa/Times-Herald Creative Commons license via Flickr
So rather than paying better wages to employees, or allowing more employees access to the company’s health insurance, or hiring more employees, or even just paying off corporate debt… Walmart directors want to spend $20 billion on reducing the number of shares of stock.
It’s all a question of priorities. And condensing corporate ownership has been one of Walmart’s priorities for at least a decade. Walmart has “repurchased” almost 30% of its shares since 2005.[v]
While taxpayers have been paying billions of dollars each year in public assistance to Walmart employees.
While Walmart employees have had to ask for public assistance, just to make ends meet for their families.
As the “Fight for Fifteen” movement[vi] continues, it’s worth asking:
If Walmart can afford $20 billion for more stock buybacks, why isn’t it already paying better wages to employees?
On Monday, members of the United Steelworkers Local 1999 who work at the facility scheduled for closure traveled to the UTC shareholder meeting in Florida. The USW members delivered a petition signed by 4,500 people, asking the company to reconsider moving their jobs to Mexico, and called on UTC to keep good, family-sustaining jobs in Indianapolis.
“Abandoning the Indianapolis plant will have a devastating effect on not only 1,400 workers, but also our families and our community,” said USW Local 1999 Unit President Donnie Knox. “UTC’s decision to move our jobs to Mexico and the video of a manager’s callous delivery of that devastating news to workers in Indianapolis have made Carrier and UTC into poster children for corporate greed.”
United Technologies’ greed is not unusual. It is exactly what many of the other American companies have done over the last thirty years. Corporations sell out American workers, who labored to build the company from the ground up, only to watch their jobs shipped overseas so the stockholders can make a quick buck.
What about the people who work for UTC? Instead of reinvesting in the company, expanding current operations or increasing the wages of the hard working men and women who built the company, UTC decided to use all those billions to buy back their own stock.
Just imagine what that $12 billion could have meant for the 195,000 workers employed by UTC.
As if spending $12 billion to buy back their own stock was not bad enough, let us not forget that UTC also paid out dividends to stockholders. In 2015, UTC paid a quarterly dividend of around $0.66 per share. This means that over the year UTC paid out $2.50 to all 843 million shareholders, totaling $2.1 billion dollars in dividend payouts.
That’s more than $14 billion total paid to stockholders in buybacks and dividends. The amount of money would it take to keep these 1,400 workers in Indianapolis would be just a drop in the bucket, compared to what is being shelled out to stockholders. The greedy executives do not seem to care about the workers, their families, or the city they will destroy when they close this factory.
Knox, and his fellow Steelworkers, delivered a petition with more than 4,500 signatures from Carrier employees and their supporters from Indianapolis and around the country, calling on the company to reconsider its heartless decision to abandon American workers.
Carrier’s decision to move these jobs to Mexico is what is wrong with too many American corporations. They no longer care about building a lasting company that employs as many Americans as they can, they only care about how they can boost their stock prices to further line their own pockets.
The members of Local 1999 are going to continue to fight until Carrier reverses their decision to send these jobs to Mexico.
On Friday, April 29, members of USW Local 1999 will take the fight to save their jobs to the streets with a march and rally at the Indiana State Capitol. The rally will be headlined by USW International Vice President Fred Redmond, U.S. Senator Joe Donnelly and AFL-CIO President Rich Trumka.
Here are three articles on United Technologies stock buyback program:
Jeff Smisek, the guy forced by scandal to resign last week as CEO of the world’s fourth-largest airline, is a major reason American workers can’t get a raise.
Smisek and his overpaid boardroom buddies nationwide have swindled American workers and American communities in a scam to amass wealth for themselves and well-heeled stockholders. They’ve extracted value from corporations and put it in their pockets and shareholders’ purses almost to the complete exclusion of investing in their corporations to create new wealth and prosperity.
CEOs like Smisek began sucking the financial lifeblood out of corporations in the 1970s. That’s when corporations stopped raising worker wages in tandem with rises in productivity and curbed research and development. Instead, corporations spent increasing portions of profit on dividends and stock buybacks. This goosed CEO compensation while squashing worker pay. Over four decades, it has degraded corporations and produced the worst income inequality since the Great Depression.
Smisek’s failed leadership at United Airlines illustrates exactly how this CEO self-dealing scheme works to the advantage of wealthy executives and shareholders while damaging workers, communities, customers and corporations.
Under Smisek, passengers, workers and taxpayers found the skies decidedly unfriendly.
Ever since United and Continental Airlines merged, at Smisek’s urging, the corporation’s computer system has failed repeatedly, inconveniencing United customers. Months of computer glitches ensued immediately after United combined systems with Continental in 2012, and since then problems plagued fliers six times, including one in July that temporarily grounded the United fleet globally, and one last week that delayed 4,900 flights for as long as 90 minutes.
This may help explain why United ranked dead last among major domestic carriers in this year’s J.D. Power airline satisfaction survey, which measures performance in seven areas including costs, fees, in-flight service and reservations.
In addition, in five years, Smisek failed to complete combined labor agreements with two major unions, the Association of Flight Attendants representing 21,000, and the Teamsters representing 9,000 mechanics. Smisek made sure he had a personal contract with United guaranteeing him a golden parachute worth millions no matter how badly he performed. But he didn’t do anything for the workers who make sure planes and passengers are safe.
It wasn’t so great for United. Or its workers. Or communities that support the airports from which United flies.
Smisek wouldn’t use a penny of that $3 billion to solve United’s problems with computers, on-time arrival, customer satisfaction or labor relations. He let those problems mount, weakening United as a corporation. He took out of the corporation billions that could have been used to fix them.
United workers denounced the move. Capt. Jay Heppner, chairman of the leadership council of the Air Line Pilots Association branch at United and a member of the United board of directors, wrote his fellow 12,500 pilots about Smisek’s lack of vision: “buying back shares of a company’s stock signals to investors that executive management cannot think of anything better to do with its excess cash.”
A truckload of United cash – $8.4 million now, and as much as $13.2 million more later – will leave the corporation with Smisek, despite his failures to resolve the airline’s problems and the fact that he remains the subject of a federal corruption investigation. A huge chunk of those payments depends on stock price – which, of course, Smisek manipulated with his $3 billion buyback.
“As a result, the very people we rely on to make investments in the productive capabilities that will increase our shared prosperity are instead devoting most of their companies’ profits to uses that will increase their own prosperity—with unsurprising results.”
This reversed historical trends. After World War II, until the late 1970s, Lazonick’s research found, companies retained earnings and reinvested them to build corporate capabilities and worth, including decent pay raises for workers whose labor made the firms competitive. Lazonick calls this value creation. At that time, the share of U.S. income taken by the top 0.1 percent of households stood at the lowest point in the past century.
In the 1970s, corporations began allocating increasing portions of profits for stock buybacks and dividends. Lazonick calls this value extraction. CEOs withdraw value, serve themselves and leave corporate shells.
To support value extraction, many corporations also suck communities dry, demanding tax breaks, free installation of infrastructure like roads and rail spurs and tax-supported worker training. They threaten communities that don’t comply.
United made such demands of the Port Authority of New Jersey and New York.
By then, though, Smisek’s corporation had already gotten most of what it wanted out of the government agency that is supposed to serve the public. The Port Authority paid for what Smisek wanted – although United clearly has plenty of dough to cover its own costs – at least $3 billion anyway.
The Smisek-Samson dealings are the subject of a federal corruption investigation. But what’s more corrosive to workers, communities and corporations is CEOs spending more and more on stock buybacks and dividends and investing less and less in research, development and workers.
Lazonick, director of the Center for Industrial Competitiveness, says it best:
“If the United States is to achieve growth that distributes income equitably and provides stable employment, government and business leaders must take steps to bring both stock buybacks and executive pay under control. The nation’s economic health depends on it.”
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