Sen. Brown wants to crack down on stock buybacks
WASHINGTON — Sen. Sherrod Brown says he’s fed up with corporations that buy back stock for their executives rather than invest those profits in higher wages, worker training or capital investments.
In what has become the latest chapter of his quest to recognize what he calls “the dignity of work,” Brown, an Ohio Democrat, Wednesday announced he was introducing a bill that would curb the practice of stock buybacks, forcing companies to give every worker a $1 dividend for every $1 million spent on stock buybacks, dividend increases and special dividends.
The bill would also lower the amount of stock buybacks a company can make and impose reporting requirements to ensure the transparency of corporations’ stock buybacks.
“Wall Street considers shareholders’ equity in a company to be all that matters, but workers have equity in a company, too — it’s called sweat equity, and it’s time workers are rewarded for it,” Brown said in a press conference at the National Press Club.
Brown said that the practice of large corporations buying back stock has increased since the 2017 tax bill, with the largest U.S. companies spending $806 billion on stock buybacks in 2018 — 55 percent more than they spent in 2017.
The buybacks typically benefit large shareholders and corporate executives whose pay packages include stock compensation. In 1989, the ratio of CEO-to-worker compensation was 58 to 1, but by 2017, it was 312 to 1.
Brown, who briefly flirted with the prospect of running for president in 2020, has lamented that American workers in 2019 are treated poorly — as, he said Wednesday “a cost to be minimized.”
“We need to reorient our economy from Wall Street greed to the dignity of work,” he said.
He’s introduced a series of bills on that theme. This bill, the latest, has no House counterpart yet, and he’s done little to ask fellow senators to sign on, though he does plan to seek supporters in both chambers.
Instead, he admitted, it’s more conceptual, an idea that he wants to introduce to the debate with the hopes of selling it over a period of time.
“Like any new big idea, it takes a while for it to be discussed and understood and its ramifications known,” he said, admitting “it’s not going to pass this week, it’s not going to pass this month.”
He dismissed the notion that offering a dividend to workers would cause layoffs or increases in prices.
“I didn’t hear anyone complaining that prices might go up when Walmart spent $8 billion on stock buybacks,” he said.
‘Wall Street considers shareholders’ equity in a company to be all that matters, but workers have equity in a company, too — it’s called sweat equity, and it’s time workers are rewarded for it.’
Sen. Sherrod Brown, D-Ohio