Tuesday, October 15, 2019

Vox explains how American CEOs got rich by buying back their companies' stock


I could not decide what to write about today until I listened to the October Democratic debate on the way home from work and heard Joe Biden mention corporations using their profits to buy back stocks instead of investing in their workers by raising wages and benefits.  I thought "Vox has a video about that."  So here is How American CEOs got so rich, which explains the history of stock buybacks and the role they play in increasing CEO compensation at the expense of workers.

For a long time, it was off-limits for a corporation to buy back its own stock. Not anymore.
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American companies today spend billions on stock buybacks. So what does that mean for the US economy? And how did it help make American CEOs so unbelievably rich?
What struck me was the connection between CEO compensation and investor dividends to the closing of GM plants.  Plant closings are one of the issues in the ongoing UAW strike against GM.  So is getting rid of two-tiered wage scales and putting every worker on the same scale, which will increase wages overall, even if it might not benefit those on the top tier much if at all.  Is GM willing to reduce its shareholder and executive compensation so it can pay workers?  I'm guessing it's resisting that idea, which is why the strike is in its fifth week.  At least there are signs GM and the UAW are getting close to an agreement.  I hope that's so.

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