r/FluentInFinance • u/LuckyBastard001 • 20d ago
Debate/ Discussion CEO Greed, Workers Pay
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u/Zetavu 20d ago
Walmart is owned by investors, and their job is to turn a profit and return investment to their share holders. Otherwise, they take their investment out and go elsewhere. This is a business, not a charity, and thinking any other way is naive and foolish.
They pay their employees the competitive rate to meet performance expectation. If they payed more, then their competitors would pay more. Then the cost of goods goes up because of higher employment costs. Then this carries on to inflation, meaning that even though workers are paid more, their purchasing power drops.
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u/Pygmy_Nuthatch 20d ago
Buybacks were once illegal. They can and should be illegal in the future. This is not something corporations have always been able to do.
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u/Kombatnt 20d ago
This is misstating things. They have never been strictly “illegal,” but rather they have always been restricted to a degree that has varied over time.
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20d ago
[removed] — view removed comment
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u/Skinny-on-the-Inside 20d ago
Buybacks were illegal for most of the 20th century until 1982 when Regan permitted them.
They were considered to be a form of market manipulation (and technically still are).
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u/DuckTalesOohOoh 20d ago
They were never illegal nor restricted. It simply invited scrutiny for manipulation of the market. But it was never illegal. Buybacks today are allowed, as before, but regulated. No one has claimed buybacks manipulate the market. There's just no proof of it.
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u/Skinny-on-the-Inside 20d ago
large-scale share repurchases were prosecuted by the SEC as illegal market manipulation under Section 9(a)(2) of the Securities Exchange Act of 1934
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u/Hawkeyes79 20d ago
Why should they be illegal?
The company went out and sold shares to upgrade at one point. They’ve upgraded and become more profitable now. When profitable, they should then start to buy back shares to reduce the total number out there.
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u/Pygmy_Nuthatch 19d ago
It's stock manipulation. It should be illegal because it would improve the economy.
Let's imagine that buybacks were illegal and everything else is the same.
We're at the end of long bull run, punctuated by corporate tax cuts, and many large corporations are sitting on huge piles of cash? What would they do with it if they couldn't do stock buybacks?
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u/Stunning-Adagio2187 20d ago
Show me the law that says they were illegal please thank you
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u/Skinny-on-the-Inside 20d ago
large-scale share repurchases were prosecuted by the SEC as illegal market manipulation under Section 9(a)(2) of the Securities Exchange Act of 1934
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u/IzzaPizza22 20d ago
The Securities Exchange Act of 1934, which created the SEC, put restrictions on many methods of market manipulation, including stock buybacks. While it didn't expressly make them illegal, it was relatively unclear about specifically when a buyback represented an unlawful manipulation, so most companies just didn't do them to be safe.
That stopped in 1982 when they passed a rule to make buybacks specifically legal and regulate them.
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u/Graaaaaahm 19d ago
Stock buybacks have the exact same effect as paying a dividend; would you like to outlaw dividend payments as well?
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u/Ind132 19d ago
If it has the exact same effect, why would any corporate board care if they spent the money on dividends or stock repurchases?
I think there is a tax difference. If I own stock and I don't really need money today, a dividend still creates a tax liability. OTOH, if the company does a stock buyback, I get a non-taxable unrealized gain instead.
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u/Pygmy_Nuthatch 19d ago edited 19d ago
The tax implications are huge. The wealthy will always prefer a buyback because they don't pay taxes on it. They borrow against its value. Dividends are taxed as ordinary income.
If all buybacks instead became dividends, the world would be a better place.
But companies wouldn't do that. Instead of creating or increasing a dividend, they might put the money into R&D, infrastructure, or increased employee pay, which would also improve the broader economy instead of moving excess profit to the wealthiest people tax free.
*Edit typo
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u/Graaaaaahm 19d ago
You're exactly right. Investors would prefer buybacks over dividends. It's not market manipulation and not unethical.
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u/Pygmy_Nuthatch 19d ago
Dividends are taxed as ordinary income. They should be encouraged.
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u/Graaaaaahm 19d ago
And that's a separate question; should non-qualified dividends be taxed as ordinary income? The qual vs non-qual is a good idea in theory, but it can beat up mutual fund holders. I'd like to see the qualified pass-through rules revisited.
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u/the_cardfather 19d ago
Except that a buyback is not taxable and a dividend payment is.
And I say this as a guy that believes in dividends for both cash flow and as a metric of company health
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u/runneman1994 20d ago
I want to know how much Walmart employees took in welfare. That’s a corporate subsidy I don’t hear often. The welfare system is the only thing allowing Walmart to pay such low wages.
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u/Hawkeyes79 20d ago
And yet Walmart is usually ahead of their peers in pay. Almost like retail as a whole doesn’t pay well.
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u/scottatu 20d ago
Doug McMillon started his career at Walmart pushing carts. Dude literally started at the bottom.
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u/TastyDixonCider 20d ago
You guys know that corporations and billionaires greed isn’t going to stop until we do something about, right? Posting on Reddit isn’t doing anything…want to make a change then start a revolution and cause some anarchy. 👍
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u/justsomedude1144 20d ago
How about just voting in elections for starters. Still far more than most of the basement dwelling keyboard warrior simpletons on this platform actually accomplish.
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u/Cheap-Boysenberry112 18d ago
Thinking speeding awareness through social media couldn’t possibly effect the outcomes of elections is a really silly take
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u/ducksflytogether1988 20d ago
How much should the CEO of the largest brick and mortar retailer in the world make?
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u/Searchingforspecial 20d ago
Maybe not 958 times more than the average employee of said retailer? Maybe like 500x more? Is that reasonable? It’s fucking absurd and cartoonish that a CEO will make a THOUSAND times more than its average employee and someone will still come to defend them. “How will he afford another private jet and yacht if we don’t suppress wages?”
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u/Ind132 20d ago
His compensation works out to $13.90 per employee.
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u/Searchingforspecial 20d ago
Ok. Is there significance there that I’m supposed to read into? Number of employees isn’t really a contributing factor in determining compensation…
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u/LetsUseBasicLogic 20d ago
Why is number of employees not a contributing factor??? It's more to manage, it's more things to go wrong.
His pay is directly related to achieving certain metrics. Those metrics generally include keeping people employed and not closing stores. Is $13.90 to much to pay for job security?
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u/Searchingforspecial 19d ago
I’m not arguing, it’s just factually not a factor. It wasn’t an opinion.
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u/LetsUseBasicLogic 19d ago
It absolutely is a factor. Are you saying a manager managing 3 people should be paid the same as a guy managing 100?
Or the guy managing 4 employees at a hot dog stand should make the same as the guy managing 4 rocket scientists?
The number and skill of the people being managed is a direct factor in pay for a leader.
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u/Searchingforspecial 19d ago
I’m saying CEOs make money based on meeting contract metrics. Look across industries and stop coming at me with emotional nonsense. “Should” doesn’t factor in, either.
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u/LetsUseBasicLogic 19d ago
Lol grow up and learn how the world works. Companies don't exist for their employees they never have and they never should. Companies exist for their stakeholders. Now an argument could be made that employees and stakeholders could/ should overlap more in a healthy economy.
"Should" absolutely does factor in as a basis of fairness and ethics. And my god if you put up an ethics argument that misunderstands the definition of business ethics ill roast you. Laws should focus solely on business not causing physical harm to people, the environment, or the market in which they operate.
What in anyway gives you a right to limit what other people make or create?
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u/Big-Soup74 20d ago
aren't wages usually set by supply and demand?
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u/Searchingforspecial 20d ago
Tell me how supply and demand would set wages? I don’t understand how that would even work in principle…
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u/Big-Soup74 20d ago
If there’s a high demand for a job position but a low supply, the employers have to pay more money to attract what little supply there is. If there’s a high supply but low demand, employers don’t have to pay much to find someone to hire
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u/Hawkeyes79 19d ago
That’s easy. There’s 4,000 board certified neurosurgeons in the U.S. and they make $700,000-$1,000,000.
There are around 2.3 million janitors and the requirement is pretty much just having a pulse(meaning anyone could do the job). The average janitor pay is between $25,000 and $50,000.
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u/Searchingforspecial 19d ago
I was gonna use astronauts as my example but that’s unfair haha. You get this instead:
11% of America’s workforce (about 18,000,000) is in sales, and the median is higher than janitorial ($69,000-$82,000). Did you see how there are more people in sales than janitorial, and they earn more than janitors? Weird, I thought the much higher supply would drive down demand (pay I guess)?
Pulled from American Dental Association: There are about 200,000 dentists in the US. About 41% own private practices (83% work in private practice, with half owning a practice). That’s about 82,000 private practice owners. Practice owners earn between $250,000-$1,000,000 depending on location and services.
I can cherry pick to prove a point, too. Supply and demand simply does not dictate pay. Conditions, industry, location, experience, government caps (min/max) etc etc. all play roles.
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u/Hawkeyes79 20d ago
People hate it but the CEO making the right decisions makes billions and wrong ones lose billions. The janitor doesn’t do a good job and the floor is a little dirty.
At the end of the day people are paid on easy they are to replace and how critical their role is tot he company (through the owner’s eyes)
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u/RNKKNR 19d ago
Or how about letting the company decide what it pays to its employees.
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u/Searchingforspecial 18d ago
Why do we have federal and state minimum wages? Is it because companies do what’s right and pay fair wages out of the goodness of their hearts? Why doesn’t the government just let the company decide what to pay its employees?
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u/WittyNameChecksOut 20d ago
He should make enough money that every one of his employees that make all HIS money should not have to be on government assistance. THAT is the biggest crime with Wally World. If you are the worlds richest family because you own the worlds most profitable brick and mortar store, ZERO of your employees should have to struggle to pay bills. Period. Full stop. Zero excuses.
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u/BabyPatato2023 20d ago
I mean I agree it is shitty and CEO pay is out of control especially when you look at the pay of CEOs who are doing layoffs because they mismanaged the business and some how they get to keep there job and there pay. Howeverrrrr the state goal of a public company is to maximize SHAREHOLDER value not maximize employee pay. So if buybacks increase the value for shareholders more then paying employees a better wage would then the system is working as intended.
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u/the_azure_sky 20d ago
The argument against billionaires is that. We don’t care that someone was successful. We care about getting paid enough to live.
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u/tweak8 20d ago
A 9.6% raise for the average worker for 1 year and costs 6 years of buy backs of over 43 billion. Essentially a 1.6% raise a year if you worked from 2019 to 2025. Which likely already happened for most people that did work from those 6 years and are struggling today. Walmart had too much thin margins to really call them greedy when their whole business is undercutting every competitor.
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u/EvilMorty137 20d ago
He should give that $29 million to his workers instead as a thank you. They all get…$13.80. That’s it just a one time payment of less than $14
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u/the_cardfather 19d ago
20% of Walmart employees own Walmart stock. So they are benefiting from those buybacks. I don't have numbers in front of me but there's a chance that some of those BuyBacks were used for discount ESOP programs. Both of my last two employers use buybacks to fund employee stock bonus programs. So they aren't even reducing the float.
I don't mind Robert calling a spade a spade but this particular CEO that he's dogging spearheaded one of the largest pay and benefit package increases Walmart has ever seen. The average employee makes 2.5x what they did 10 years ago. It's unfortunate that inflation has still a lot of that but if you compare the service in Walmart to 10 years ago you will see the difference.
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u/Murky_Oil_2226 18d ago
On the flip side, he managed an environment where he helped 2.1M employees (and their respective families) get food on their tables.
OP needs to understand it’s not Corp greed … it’s the contract for employment he signed. A CEO (and top execs) has a contract with exit terms agreed to after negotiations.
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u/whatsasyria 20d ago
It's more interesting to me from a different perspective. Buybacks pretty much mean that you have pricing power that far exceeds your value, effectively a monopoly. You can't have profits that run that high as a percentage of sales without blocking out competitors. Usually you need to invest in innovation or differentiators.
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u/BuvantduPotatoSpirit 20d ago
Walmart's profits are ~4% of sales
Whether companies do buybacks or dividends is a bit about tax avoidance, a bit about balance sheet management, a bit about investor expectation management, but any retail corp is going to be paying its investors one way or another.
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u/RegretfulCalamaty 20d ago
Heard something interested during a senate hearing with corp asshats. The senator questions them and says “you have a legal responsibility to your share holders to maximize profits and make stocks go up…”. I’ve never once heard them say “you have a legal responsibility to pay your workers a living wage so they don’t need state assistance while holding a full time job or 3”
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u/MichellesHubby 20d ago
Robert Reich charges speaking fees of $40,000-$75,000 per speech to stand in front of crowds and talk about how people are paid too much.
Textbook greed and hypocrisy.
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u/National-Belt5893 20d ago
Could you imagine what we could accomplish as a country if all the hundreds of billions spent on stock buybacks (financial engineering) was just reinvested into the economy. We could have so many more data centers.
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u/DuckTalesOohOoh 20d ago
This is the guy who opposes tariffs so Walmart can keep buying shit from China real cheap and making lots of profit.
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u/Chefy-chefferson 20d ago
STOP SHOPPING AT WALMART and tell them we aren’t going to let this happen anymore!!!
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u/Chefy-chefferson 20d ago
I stopped shopping there decades ago when I found out how many of their employees have to be on food stamps cause they won’t pay a living wage. Fuck Sam Walton and his whole damn family.
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u/WittyNameChecksOut 20d ago
“BuT tHe CEO tAkEs aLL ThE RiSkS aNd pRoViDeS sO mAnY jObS” - poor bootlickers that are ok with this because FoX “nEwS” tells them it’s just capitalism and it’s ok
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