CEO Pay and Stock Buybacks Have Soared at the Largest Low-Wage Corporations

That's quite the leap though, and is just confusing correlation and causation. Maybe the previous leadership was simply getting in the way of the engineers and managers that had the good ideas. And the new leadership was more hands-off, or focused in other areas like marketing. Or those cases are just flukes. For every case like the ones you cite, I could find two where the exact opposite happened.

If you're downing a shot of vodka every morning, and suddenly stop, then yeah, your health is going to improve.

In my opinion, many (if not most) of these CEOs are business-focused people with no technical (or even non-technical) knowledge of anything they purport to manage. And on the whole, they really don't affect the value of the company one way or the other.

Not really. There are a lot of external factors that could explain the difference in the company's performance. Different time, different customers, different overall market strength, different availability in capital, different interest rates. You can't pin the company's success or failure entirely on the CEO, and there is not that much correlation between CEO compensation and company success.

I think a lot of people could do Nadella’s job and you’d see similar company performance. In fact I’d be so bold to say that the higher up on the totem pole you go, the more people could do an equal or better job. The world has few CEOs simply because the world has few companies, not because the job is particularly difficult or requires niche, rare skill.

We love to hero worship, though, and the fiction we consume loves to uplift That One Person who won the day, downplaying everyone else who contributed to that win, and the environment in which the win happened.

"most academic research finds little long run effect on Americans’ wages."

Right, with this sentence being important right after:

"studies suggest that these gains come at the cost of short-term losses from lower wages and higher unemployment."

Nike opens factories in low-cost areas because they're allowed to. Before Clinton, most things were built in the country. Profits were lower, but the wage gap was also much lower.

Clearly there foreign workers at Starbucks or there would not be protests: According to the popular videos circulating over the Internet, Starbucks halted a few minutes of their services across the nation as a form of protest against the recent “illegal deportation of immigrants.” "We are stopping work for a few minutes to read a statement in protest of actions against our fellow workers," Starbucks Workers United members at the Ellicott City location in Maryland said in a statement during their strike on April 1.

https://economictimes.indiatimes.com/news/international/glob...?

"Restricting immigration might reduce competition in some low-skill job markets, but it can also harm industries that rely on labor shortages being filled"

So restricting immigration of low wage workers, would push up wages in low wage industries. Seems pretty clear.

Do buybacks cause profits to increase? Maybe from what I can see? But long-term? If all we care about is short-term then that will lead to the continued financial cannibalization of the US economy. Where private equity firms buy companies and destroy them for short-term profit while loading them with the debt used to buy them.

I think the obvious answer to both these questions is: no. CEO pay and buybacks don't focus on profits. At best short-term. Which isn't good.

I think companies should focus on making good products that positively serve the countries they sell in, while secondly still aiming for a profit.

The iPhone swipe keyboard is crap. I have much better luck with GBoard, but then I have to install GBoard, and have all sorts of issues with app unresponsiveness or crashes whenever either GBoard or iPhone updates.

If you don't have a minimum wage, some people get paid below this level, and they somehow struggle along in poverty. But there is no real incentive for the state to help them.

Establish a minimum wage. Now these people are unemployed. Which contributes to the unemployment percentage. Causes the government to lose votes. The state has to pay out unemployment benefits to these people. The govt+state now have real incentives to change the structure of economy to ensure jobs are created for these people that are productive enough to justify the minimum wage.

... Sundar Pichai, is that you?

The point is that poaching a new CEO from another company (in this case, Chipotle), and awarding him a pile of stock options if he hits certain metrics is not pay, is not comparable to W2 income, does not hit his bank account, and does not make anyone else poorer, except theoretically the shareholders, who were so excited to hire this new guy that the stock literally popped 20% when the news broke.

Too much over the market rate, and you're not maximally efficient at converting economic inputs into larger economic outputs.

Too much under the market rate, and you'll see increased employee churn, leading to all sorts of other problems.

If you want workers to be paid more, as we all do, even us greedy capitalists, their economic productivity has to go up (not the same as working harder).

The best way to do that - as far as I know - is improving technology and education.

> For most of the 20th century, stock buybacks were deemed illegal because they were thought to be a form of stock market manipulation.

https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-...

which just formalized ways that the SEC was finding corporations not guilty and transparent enough, this blueprint paved the way for corporations to all copy it as well as reducing the administrative overheard of caring at all

the exceptions make the rule

The fundamental purpose of a buyback is not to raise the stock price. The purpose of a buyback is to reduce the amount of outstanding shares, which makes every existing owner own an increased percentage. If a company buys back 10% of its stock, each long term shareholder now owns 10% more of the company. Over the long term, steady buybacks increase shareholder value this way, but the purpose of it isn't to slam the order book and juice the price. That's counterproductive, because you'll buy fewer shares at higher prices, and within a trading day, the market will push the price back to normal anyway.

Before tech companies demonstrated the principle of infinite growth, the purpose of a company was to generate revenue (paid as dividends) for its shareholders.

So much growth hasn't really been possible before.

If a company can keep growing and investing infinitely, one might argue that it's time for the DOJ / FTC to step in and stop them from eating the entire business sector. That's the sign of a monopoly pushing into every market like an invasive species and making the existing businesses in those markets go extinct. Kind of like how tech companies are now movie companies, music companies, game companies, pharmaceuticals, grocery stores...

They temporarily raise the stock price for the people who are the counterparties to the stock purchase, but isn't that also creating a taxable event for them?

Once the buyback is done, what's keeping that share price from sliding right back down to earth? The shareholders who support the company and hold watch a group who bet against the company by selling shares reap a profit, in a tax advantaged way, while their own dividends are effectively stolen. The buybacks are actually a crap deal for anyone who is a responsible buy and hold investor.

  Fundamentally this is the corporation saying it doesn't have a market-beating way to reinvest this capital

Much of the gains in the stock market the past decade or so are simply the result of a greatly reduced number of shares available to purchase - as a result of buybacks, takeovers and going private (there are roughly 1/2 the number of listed companies today as in the 1990s).

And maybe I don't understand the stock option game and stock BuyBacks don't count towards the strike price for options. But I doubt it

I don't know what planet you're living on, where nobody's ever been upset about dividends.

The solution to this isn't to get mad (or even do something about) CEO wages, but to make sure there are other good reasons why companies might not use these approaches to maximize shareholder returns (ie stronger government regulation, making these approaches illegal).

Using only one metric is THE classic way to misunderstand a system.

> Society is broken for those at the bottom, and if their numbers grow too large, it will become broken for everyone.

It's difficult to capture my intention and perspective in a short comment. In my personal belief, if the future is going to be better than the present, we need to share resources more fairly.

However, money is an imperfect representation of resources. For instance, the extremely wealthy may eat more food or more quality food, but not anywhere near a proportionate excess. They may have a bit more housing, but generally not proportionate to their excess income. Etc etc etc for most things.

This is not excuse, or justification.

What I am saying is that focusing on the excess wealth can become a distraction.

I believe that the majority of harm relating to income inequality does not come from the inequality itself, or even excess resource (food, housing, etc) consumption.

I believe that the majority of harm comes from actions taken while attaining and defending wealth.

It's regulations bent and broken while growing a business.

It's not the housing per se, but the housing must retain value.

It's not the stock portfolio per se, it's the tax loopholes exploited.

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Excess wealth is a correlation to harm. Beyond that, I feel that care must be taken.

Beware of easy narratives and blame.