Michelle ThompsonA recent study indicates that US-based corporations are experiencing record-breaking profits and are channeling a significant portion of those earnings back to shareholders. The S&P 500 has surged by over 10% this year, largely due to expectations of increased dividends, which are payouts made by companies to their shareholders using profits. Data from the CME Group shows that dividend payments to shareholders in companies listed in the S&P 500 hit a new high in 2023, with projections indicating further growth in 2024.
The study highlights that the combined net profits of the 200 largest publicly traded US companies soared to $1.25 trillion in 2022, representing a 63% increase from 2018. Approximately 90% of these profits, totaling $1.1 trillion, were distributed to shareholders through stock buybacks and dividend payments. However, only 10 out of these 200 companies have publicly expressed support for paying a living wage.
In contrast, CEO compensation, often augmented by company shares, has risen by nearly a third for these companies since 2018. Some firms now have an average CEO-to-worker pay ratio exceeding 1,500 to 1, according to the study.
Critics argue that stock buybacks enable wealthy executives to manipulate markets while diverting corporate profits away from workers. They propose that restricting or preventing share repurchases could lead to increased investment in growth and higher wages. On the other hand, supporters of buybacks contend that they efficiently distribute excess capital, potentially enhancing stock prices and earnings per share.
The study also suggests that large US firms are exacerbating inequality by prioritizing shareholder returns over the well-being of their employees, thereby reinforcing gender and racial disparities in the workplace. Oxfam’s analysis reveals that the retail sector, despite being demographically diverse, exhibits significant inequality in executive representation and compensation.
Moreover, the study highlights concerns about tax avoidance by both wealthy individuals and corporations. President Joe Biden has proposed a 25% tax on individuals with wealth exceeding $100 million, aiming to address disparities in tax rates between billionaires and ordinary workers. Additionally, recent analyses indicate that executives at some large US companies earned more than their businesses paid in federal taxes between 2018 and 2022. Pharmaceutical companies, for instance, paid an average tax rate of just 11.6% in 2022, below the statutory corporate tax rate of 21%, due to various legal tax-reducing strategies.
Trump Media, the owner of Truth Social, is set to commence trading on Tuesday following the closure of its merger.
On Monday, Trump Media & Technology Group announced the completion of its merger with a publicly traded shell company, marking the commencement of trading on the stock market on Tuesday.
Former President Donald Trump, who serves as the chairman and dominant shareholder of the new company, is poised to reap a multi-billion dollar windfall from the merger with Digital World Acquisition Corp. Shares of Digital World surged by 21% following news of the merger’s completion, climbing by an additional 33% to around $49 by Monday afternoon. Trump’s stake in the company is currently valued at approximately $4 billion, though lock-up restrictions are likely to prevent him from selling or leveraging the stock’s value for several months.
Trading under the ticker symbol “DJT” on the Nasdaq Stock Market is scheduled to commence on Tuesday, according to statements from the companies.
Devin Nunes, CEO of the combined entity, emphasized the company’s mission to “reclaim the Internet from Big Tech censors.”
However, experts caution that the market may be overvaluing Trump Media given its financial performance. SEC filings show that Trump Media generated only $3.4 million in revenue during the first nine months of last year, with a net loss of $49 million over the same period.
Furthermore, Truth Social, the social media platform launched by Trump Media, is experiencing a decline in its user base. According to data from Similarweb shared with CNN earlier this month, the number of monthly active users on Truth Social’s iOS and Android platforms in the US has dropped by 39% compared to the previous year.
Boeing CEO Dave Calhoun is expected to resign in response to the company’s persistent safety issues.
Boeing CEO Dave Calhoun announced on Monday his intention to depart from the troubled company by the end of the year, signaling a significant shakeup in its leadership. Alongside Calhoun, Boeing’s chairman and the head of the commercial airplane unit will also be leaving, according to reports from my colleague Chris Isidore.
In an interview on CNBC Monday morning, Calhoun emphasized that the decision to leave was entirely his own, stating it was “100%” his choice.
However, Calhoun has faced criticism over the management of Boeing in recent decades and the series of safety and quality issues that have plagued the company. Over the past five years, Boeing has grappled with numerous problems with its aircraft, including two fatal crashes of the 737 Max in 2018 and 2019, resulting in 346 fatalities. More recently, an incident involving a door plug blowing out of the side of an Alaska Airlines 737 Max in January drew further attention to safety concerns. These issues have led to multiple groundings for safety reasons and cumulative losses exceeding $31 billion.
