While We Sleep, Corporate Execs Strip-Mine America

[marmar]

While We Sleep, Corporate Execs Strip-Mine America
by Fabius Maximus • October 8, 2015


[font size="3"][font color="blue"]But all games have an endgame.[/font][/font]


Nothing shows how America’s reins are held than our out-of-control corporations, enriching their executives at the cost of the future of their businesses — and ours. Here’s another status report on this sad but fixable story.

The Q2 Buybacks Report by FactSet is, as usual, sobering reading. During the 12 months ending in June, companies in the S&P 500 spent $555.5 billion repurchasing their shares. For the first time since October 2009, buybacks exceeded free cash flow (cash flow after capex); they’re borrowing to buy back shares.

For the past two years buybacks have run at the fantastic rate of about $120 billion per quarter — the same rate as in 2006-2007, with tech companies the leaders. In 2014 they spent 95% of their profits on buybacks and dividends (building the future is somebody else’s problem in corporate America).

Investors applaud this as a boost to share prices. Surprising to the naive, a decade of buybacks has reduced the S&P 500’s share count by only 2%. Share buybacks are one part of the triangle trade that transfers vast fortunes from shareholders to senior executives using stock options:

• executives exercise their options when shares rise (i.e., the company sells shares to executives at a discount to current prices),
• the executive sells those shares to the public,
• the company buys back those shares from the public.

Net result: the company has less money, their executives have more, the share count is unchanged. ...............(more)

http://wolfstreet.com/2015/10/08/how-corporate-execs-monsanto-strip-mine-america-with-stock-buybacks-while-we-sleep/

[phantom power]

1. The dismantling of America's public institutions and assets is huge, and mostly untold

There's a Pulizer waiting for somebody out there...