CEO bonuses

From economist Robert Reich's Facebook

https://www.facebook.com/RBReich

A big reason why CEOs are about to rake in big year-end bonuses even though their sales are lousy (after all, America’s vast middle class and poor aren’t earning enough to buy much) is CEOs been using their companies’ cash, plus whatever they can borrow at rock-bottom interest rates engineered by the Fed, to buy back their own shares of stock. This maneuver raises the price of the remaining shares, thereby giving the CEOs – whose pay is tied to share prices – huge rewards. This year, the 30 companies listed on the Dow Jones industrial average authorized $211 billion in buybacks, lifting the Dow (and CEO pay) to record heights. This $211 billion could have gone instead to American workers in the form of higher wages – which would have come back to companies in the form of higher sales. McDonald’s, for example, spent $6 billion on share repurchases and dividends last year, the equivalent of $14,286 per restaurant worker employed by the company. It’s a vicious cycle as long as CEO incentives are directed toward raising share prices rather than sales, and as long as the economy is organized around the stock market rather than good jobs.