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> Pretending that "paying $43B profit share bonus to workers" was even an option on the table is laughable. I don't think the author is pretending that. The au

by lapcat 2y ago

> Pretending that "paying $43B profit share bonus to workers" was even an option on the table is laughable. I don't think the author is pretending that. The author is just trying to accurately measure the cost of a CEO to a company compared to the cost of workers to a company. But some of that $43B could go pay the workers more. And some of it could go toward investment in the future of the company. Some could even go to dividends, which reward stock ownership and long-term investing. Whereas stock buybacks only reward dumping the stock. The article discusses why CEOs prefer buybacks to dividends: it's a lot harder for a CEO to get a massive payday from dividends, because they'd have to sit on their stock for many decades rather than selling after it vests.

gruez 2y ago
>I don't think the author is pretending that. The author is just trying to accurately measure the cost of a CEO to a company compared to the cost of workers to a company. The $43B for all intents and purposes, is profits waiting to be paid out to shareholders. Attributing it to being a "cost" associated with a CEO, makes as much sense as attributing the company's expenses as being a "cost" associated with the purchasing manager. >But some of that $43B could go pay the workers more. And some of it could go toward investment in the future of the company. Even if you take this handwavy argument at face value, it's stretch to imply that if it weren't for the CEO, every worker is going to get a $30k bonus. Moreover, by your own admission, paying it out as a dividend is an option, so that's the reasonable counterfactual to compare against. >Some could even go to dividends, which reward stock ownership and long-term investing. Whereas stock buybacks only reward dumping the stock. The article discusses why CEOs prefer buybacks to dividends: it's a lot harder for a CEO to get a massive payday from dividends, because they'd have to sit on their stock for many decades rather than selling after it vests. Buybacks are the same as dividends for all intents and purposes, except for some tax advantages. If you're a long term shareholder, you should be reinvesting any dividend you receive, not using it to fund this year's vacation or whatever.
- lapcat 2y ago
  > it's stretch to imply that if it weren't for the CEO, every worker is going to get a $30k bonus. That was just an illustration of how far the money could go, as compared to the direct compensation of the CEO, which wouldn't go very far. > Moreover, by your own admission, paying it out as a dividend is an option, so that's the reasonable counterfactual to compare against. It's one option, but I'm not sure why you're ignoring the reinvestment option. The whole issue is that stock buybacks provide no long-term benefit to the company. They're a short-term pump and dump. In a real, measurable sense, stock buybacks shrink the company, by reducing the number of outstanding shares. > Buybacks are the same as dividends for all intents and purposes, except for some tax advantages. That's not true at all. Dividends benefit all stockholders, whereas buybacks benefit only the stockholders who sell. The buybacks may temporarily bump the stock price, but again, that's of no immediate benefit to long-term investors who hold onto their stock.
  - gruez 2y ago
    >That was just an illustration of how far the money could go, as compared to the direct compensation of the CEO, which wouldn't go very far. No, the direct compensation of the CEO is still only a hundred bucks or so. Claiming $30k per employee as the "direct compensation of the CEO" makes no sense for the reasons I explained in my prior comment. >The buybacks may temporarily bump the stock price, but again, that's of no immediate benefit to long-term investors who hold onto their stock. No, it provides a permanent bump to the price because there's less investors to split future profits amongst, which means each share gets more profits and is therefore worth more.
    - lapcat 2y ago
      > No, the direct compensation of the CEO is still only a hundred bucks or so. That's what I said: "as compared to the direct compensation of the CEO, which wouldn't go very far." You appear to be confused. > No, it provides a permanent bump to the price A permanent bump LOL. There's no such thing in the stock market. If the company maximizes short-term results while screwing itself in the future, that so-called "permanent" bump isn't going to last.

by lapcat 2y ago

gruez 2y ago

>I don't think the author is pretending that. The author is just trying to accurately measure the cost of a CEO to a company compared to the cost of workers to a company. The $43B for all intents and purposes, is profits waiting to be paid out to shareholders. Attributing it to being a "cost" associated with a CEO, makes as much sense as attributing the company's expenses as being a "cost" associated with the purchasing manager. >But some of that $43B could go pay the workers more. And some of it could go toward investment in the future of the company. Even if you take this handwavy argument at face value, it's stretch to imply that if it weren't for the CEO, every worker is going to get a $30k bonus. Moreover, by your own admission, paying it out as a dividend is an option, so that's the reasonable counterfactual to compare against. >Some could even go to dividends, which reward stock ownership and long-term investing. Whereas stock buybacks only reward dumping the stock. The article discusses why CEOs prefer buybacks to dividends: it's a lot harder for a CEO to get a massive payday from dividends, because they'd have to sit on their stock for many decades rather than selling after it vests. Buybacks are the same as dividends for all intents and purposes, except for some tax advantages. If you're a long term shareholder, you should be reinvesting any dividend you receive, not using it to fund this year's vacation or whatever.

lapcat 2y ago
> it's stretch to imply that if it weren't for the CEO, every worker is going to get a $30k bonus. That was just an illustration of how far the money could go, as compared to the direct compensation of the CEO, which wouldn't go very far. > Moreover, by your own admission, paying it out as a dividend is an option, so that's the reasonable counterfactual to compare against. It's one option, but I'm not sure why you're ignoring the reinvestment option. The whole issue is that stock buybacks provide no long-term benefit to the company. They're a short-term pump and dump. In a real, measurable sense, stock buybacks shrink the company, by reducing the number of outstanding shares. > Buybacks are the same as dividends for all intents and purposes, except for some tax advantages. That's not true at all. Dividends benefit all stockholders, whereas buybacks benefit only the stockholders who sell. The buybacks may temporarily bump the stock price, but again, that's of no immediate benefit to long-term investors who hold onto their stock.
- gruez 2y ago
  >That was just an illustration of how far the money could go, as compared to the direct compensation of the CEO, which wouldn't go very far. No, the direct compensation of the CEO is still only a hundred bucks or so. Claiming $30k per employee as the "direct compensation of the CEO" makes no sense for the reasons I explained in my prior comment. >The buybacks may temporarily bump the stock price, but again, that's of no immediate benefit to long-term investors who hold onto their stock. No, it provides a permanent bump to the price because there's less investors to split future profits amongst, which means each share gets more profits and is therefore worth more.
  - lapcat 2y ago
    > No, the direct compensation of the CEO is still only a hundred bucks or so. That's what I said: "as compared to the direct compensation of the CEO, which wouldn't go very far." You appear to be confused. > No, it provides a permanent bump to the price A permanent bump LOL. There's no such thing in the stock market. If the company maximizes short-term results while screwing itself in the future, that so-called "permanent" bump isn't going to last.