13 October 2017
Sometime events will cause me to revisit a subject that you may have thought I had discussed enough. This is one of those times. We must revisit those fat cat plutocrats who run Walmart. Three days ago the plutocrat in chief, Walmart CEO Doug McMillon, announced a $20 billion stock buyback plan on a conference call with stock analysts. Yes, that is $20 BILLION. What does this mean? It means that the company will buy its own stock in the open market until it has bought $20 billion worth. Why do this? It reduces outstanding shares and increases earnings per share (since there are fewer shares over which to allocate earnings). Who benefits? Shareholders benefit from higher earnings per share, and thus, one expects, higher dividends. Since the Walton family owns half the shares, it is the biggest beneficiary of stock buybacks. So the wealthiest family in the nation gains the most from this move.
Who doesn’t benefit? Walmart employees. What could the Board and Management of Walmart do, alternatively, with $20 billion? Here are some of the possibilities:
- It could give each of its U.S. hourly employees an $18,182 bonus. ($20 billion/1.1 million employees)
- It could take half the $20 billion and give each of its U.S. hourly employees a bonus of $9,090. That would still leave $10 billion for the Walton family.
- For each $1 billion of that $20 billion, it could give each hourly employee a bonus of $909. I know that $909 is pocket change for Mr. McMillon and the Waltons, but it would be a big deal to someone making $10 an hour.
My question is this: Did anyone on the board of directors suggest that any of this $20 billion be spent to lift employees out of poverty or is that simply not an issue the board is concerned with?
Now I know that some sharp capitalist out there is going to say: “Hey, Quixotic Deacon, it isn’t that simple. You don’t know what you’re talking about. The stock buyback will strengthen the company and eventually that will help all our employees.” To which I respond: It IS that simple. The company is deciding to spend $20 billion to benefit the Walton family while its hourly workers live in poverty.”
That is amoral on its face.