Home Depot just stuck it to every worker (like the rest of the BIG companies do)

[Omaha Steve]

Home Depot is buying back shares of it's stock to push the price up. It upped the dividend too. Part of this $ should have gone to pay and benefits. None of it did! What ever happened to profit sharing???


http://hosted.ap.org/dynamic/stories/U/US_HOME_DEPOT_BUYBACK?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT


HOME DEPOT 4Q TOPS STREET ON HOLIDAY; OKS $18B BUYBACK

BY MICHELLE CHAPMAN
AP BUSINESS WRITER

NEW YORK (AP) -- Shoppers liked what they saw at Home Depot during the holidays, helping the home improvement chain beat Wall Street expectations for its fourth-quarter results. The retailer also authorized the repurchase of $18 billion of its own shares, boosted its quarterly dividend by 26 percent and released a better-than-expected outlook for the year.

Its shares rose 3 percent in morning trading Tuesday after briefly hitting an all-time high.

The Atlanta-based company posted a fourth-quarter profit of $1.38 billion, or $1.05 per share, for the period ended Feb. 1. Excluding a gain related to the sale of a portion of HD Supply, its profit was $1 per share. That's well above the 89 cents per share that analysts had expected, according to a survey by FactSet.

Revenue was $19.16 billion, also better than Wall Street's projection of $18.68 billion.

FULL story at link.

[blkmusclmachine]

1. ,

,

[niyad]

2. yet another reason not to give them my custom.

[Nye Bevan]

3. So corporations that pay dividends on their stocks are now considered evil?

I guess we should all be shopping on Amazon, as Amazon stock does not pay a dividend and never has.

[Omaha Steve]

4. Not just the dividend

The $18 billion stock buy back to up the stock price. Maybe you didn't bother to READ the comments OR article?

[DreamGypsy]

6. Home Depot has an employee stock purchase plan...

...https://secure.livethehealthyorangelife.com/financial_wellness/save/employee-stock-purchase-plan

But first, a disclaimer: I don't patronize big box national chain stores like Home Despot; in our community we have a local equivalent home improvement center with a "chain" of exactly two stores, one in Springfield, one in Eugene; the range of products is better than HD, AND the staff is very knowledgeable and very helpful. Better Head for Jerry's.

However, if one does happen to be employee of a publicly traded company, like Home Despot, and if that company offers an ESPP, perhaps with a 5% or so discount on price for stock purchases (don't know whether HD does this), and if that company is aggressively working to increase its stock price, then employees who can afford to dedicate part of their monthly income to stock purchases may accrue significant benefits.

At one point in my life, through no particular fault of my own, I was working for IBM - a situation where a publicly traded company and I, as a particular employee, satisfied the conditions identified in the previous paragraph. Over 5 years or so of employment I managed to accumulate a small, but significant to me, number of shares of stock at ~$65 per share with the ESPP discount. After retirement from the company I was able to sell those shares at ~$150 per share. Sure, there was risk, but whatever one does entails some risk. I lucked out.

The fact that a corporation is working to raise its stock price (through buy-backs or whatever) does not necessarily mean it is abandoning its employees to serve the investors greed. Fighting minimum wage increases, denying health care, etc. - yeah, those are evil corporate sins - no question. But working to raise stock price, aka company valuation, may in fact be a benefit to employees as well as investors.

[Yo_Mama]

10. 15% discount. I just checked.

Link, page 118.
https://secure.livethehealthyorangelife.com/files/HD_15_US_PT_All_v5.pdf

[Omaha Steve]

12. How much stock can the average store worker buy on what they make?

At the bottom it mentions they can't afford health insurance. So I'm sure the stock option isn't on the list of most of the workers.

They could have used a very small amount to lower the cost of healthcare and raise wages for the lower paid workers.

http://www.glassdoor.com/Salary/The-Home-Depot-Salaries-E655.htm

[A HERETIC I AM]

7. Unfortunately Steve, you have this wrong.

No where in the article does it claim that Home Depot is buying back shares in order to push up the stock price. Publicly traded companies do such buy backs all the time and it doesn't mean they are screwing heir employees.

Did you also read where they are planning on hiring another 80,000 people?

Now I am no fan of Home Depot, far from it. They, like most companies of their size and type, underpay their floor help, but increasing a dividend and buying back shares of common stock is not the horrible thing you have attempted to characterize it as.

[Omaha Steve]

8. Profits Without Prosperity

https://hbr.org/2014/09/profits-without-prosperity

Five years after the official end of the Great Recession, corporate profits are high, and the stock market is booming. Yet most Americans are not sharing in the recovery. While the top 0.1% of income recipients—which include most of the highest-ranking corporate executives—reap almost all the income gains, good jobs keep disappearing, and new employment opportunities tend to be insecure and underpaid. Corporate profitability is not translating into widespread economic prosperity.

The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees.

The buyback wave has gotten so big, in fact, that even shareholders—the presumed beneficiaries of all this corporate largesse—are getting worried. “It concerns us that, in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies,” Laurence Fink, the chairman and CEO of BlackRock, the world’s largest asset manager, wrote in an open letter to corporate America in March. “Too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks.”

Why are such massive resources being devoted to stock repurchases? Corporate executives give several reasons, which I will discuss later. But none of them has close to the explanatory power of this simple truth: Stock-based instruments make up the majority of their pay, and in the short term buybacks drive up stock prices. In 2012 the 500 highest-paid executives named in proxy statements of U.S. public companies received, on average, $30.3 million each; 42% of their compensation came from stock options and 41% from stock awards. By increasing the demand for a company’s shares, open-market buybacks automatically lift its stock price, even if only temporarily, and can enable the company to hit quarterly earnings per share (EPS) targets.

As a result, the very people we rely on to make investments in the productive capabilities that will increase our shared prosperity are instead devoting most of their companies’ profits to uses that will increase their own prosperity—with unsurprising results. Even when adjusted for inflation, the compensation of top U.S. executives has doubled or tripled since the first half of the 1990s, when it was already widely viewed as excessive. Meanwhile, overall U.S. economic performance has faltered.

FULL info at link.

[stillwaiting]

9. What possible reason is there for buying back stock if not to push up the stock price?

Home Depot (and MANY other companies) has decided to spend quite a lot of money reducing the number of shares outstanding so that those shares that are remaining become more valuable (i.e. push the stock price up).

Pushing the stock price up is THE reason for stock buybacks. It's why so many investors clamor for them. I do realize that there are some investors who don't think this is a good thing to do, but it is literally the reason that companies justify allocating funds in this manner. Investors would be EXTREMELY upset with the company if they didn't believe they would be getting financially rewarded for such a large outlay of Home Depot's financial resources.

So, Home Depot has made a decision to allocate resources to their investors OVER their workers. The extent to which their workers own a few shares of stock is largely irrelevant in this decision. Home Depot's capital owners receive the vast majority of this fund allocation. This is not rare or unusual in America, but that doesn't necessarily mean these companies aren't screwing over their workers via unfair wages and benefits for their labor (when they clearly have loads of cash to spare). It is the status quo (for the most part) in this country.

[madville]

14. They sell the stock to their employees

From time to time they have to purchase shares in order to have some on hand to "sell" to their employees at a 15% discount, there isn't an unlimited supply. My uncle has a bunch of HD stock and gets a nice dividend from them, it's part of his retirement income.

I had a similar setup with the government called TSP, Thrift Savings Plan. I'd buy bonds or shares of the government while I worked there and they match my purchase, up to 5% of my income. At retirement you convert that into an interest earning annuity and it pays out a monthly "income". Mine's about $1,500 a month and should last 30 years at current rates.

[A HERETIC I AM]

19. I've been on the road driving from LA back to JAX....

So I apologize for the delay, but in order to give the answer this deserves, it will have to wait till I get home tomorrow

[DanTex]

16. The whole point of a buyback is to push the share price up.

It's a form of returning the profits to shareholders, similar to paying a dividend. That doesn't make a company evil, but it is definitely a way to reward shareholders.

[TexasBushwhacker]

20. And if 50% of the shares are owned by the big wigs

like the Walton heirs owning over half of the Walmart stock, it's a really nice benefit for them, as well as other executives. It's so much more important to give more money to the 1% than it is to give raises, benefits and more hours to your employees.

[yeoman6987]

5. I guess I helped with my new 25 thousand kitchen

That they just finished last week. They did an incredible job. Maybe I would have gone to Lowes had I knew this...who knows.

[treestar]

11. The employees can't be harmed if the value of the company goes up

Wouldn't that make them safer from layoffs? And more likely to get a pay raise.

This seems an outrage not worth having.

[SickOfTheOnePct]

13. +100 n/t

[Omaha Steve]

15. Fourth-quarter profit of $1.38 billion didn't get them a raise

Today's market close: Home Depot Inc NYSE: HD - Feb 25 6:49 PM ET 116.31 a share.

[treestar]

17. We don't know for sure yet

And also the company might produce more job openings.

[Glassunion]

18. Not all big companies do that.

Most... Not all.