Lazonick looked at the 449 companies listed every year on the S&P 500 from 2003 to 2012. He found that they devoted 54 percent of their net earnings to buying back their stock on the open market — thereby reducing the number of outstanding shares, whose values rose accordingly. They devoted another 37 percent of those earnings to dividends. That’s a total of 91 percent of their profits that America’s leading corporations targeted to their shareholders, leaving a scant 9 percent for investments, research and development, expansions, cash reserves or, God forbid, raises. via www.washingtonpost.com
It went to shareholders, not stakeholders. 91% of corporate America's profits went to ... drum roll ... the shareholders. That left leaving 9% for, well, everything else.
That's why investors are so happy, er exuberant, with this market, pushing it over and over to all time highs. They're getting it all, why shouldn't they be excited.
Likewise, why should the employees be excited when the returns on their investment are shared with their executives and anybody who waves a dollar or a mutual fund or brokerage account at them.
Chuck Colson, Former President Richard M. Nixon's Special Counsel, might have described it this way:
Once you have them by the [stock options] their hearts and minds will follow.
If he did, he'd be right. The trick is there's no stock options for your most important stakeholders: employees.
Employees in these publicly traded companies then are The Left Behind before The Left Behind was a bestseller.
Ever how you say it, that's where employee engagement went.
Oh yeah, Happy Labor Day.
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