Companies Lay Off Workers While Spending Billions On Share Buybacks To Enrich Executives

[ProSense]

Companies Lay Off Workers While Spending Billions On Share Buybacks To Enrich Executives

By Pat Garofalo

Even as Republicans and CEOs of major companies complain that taxes are stifling job creation, corporations have been sitting on trillions of dollars in cash reserves, at some of the highest levels on record. The New York Times this morning notes another wrinkle in this story, pointing out that some companies have been laying off workers at the same time that they’re spending billions to buy back their own shares, thus enriching executives:

When Pfizer cut its research budget this year and laid off 1,100 employees, it was not because the company needed to save money.

In fact, the drug maker had so much cash left over, it decided to buy back an additional $5 billion worth of stock on top of the $4 billion already earmarked for repurchases in 2011 and beyond.

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There has been a steady drumbeat of other companies laying off workers even as they have disclosed plans to buy back more stock. On June 23, Campbell Soup said it would buy back $1 billion in stock; five days later it announced plans to eliminate 770 jobs. Hewlett-Packard announced a $10 billion stock repurchase in July, and jettisoned 500 jobs in September after it discontinued its TouchPad and smartphone product lines.

“It’s an extraordinarily unimaginative way to use money,” said former Labor Secretary Robert Reich. By buying back shares and lowering the number that are in circulation, executives can make their own “earnings per share” number look better, thus boosting their bonuses.

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[liberal N proud]

1. Talk about class warfare