Quote:
Originally Posted by Boomer
The 2017 tax law cuts were lauded and applauded by CEOs. corporation boards, and their lobbyists when that change in the law slashed the corporate tax rate.
It did not take long for corporations to decide to increase stock buybacks by using a mind-boggling amount from their new slush funds created by those tax cuts.
I have never liked stock buybacks -- even though I was seeing increases in share prices. I always thought stock buybacks running rampant were causing a bloated market.
I could never understand why those tax cuts did not come with some kind of parameters requiring corporations to use their new-found money for employees and capital improvements -- things to improve the overall economy. Of course, some of that money has been spent that way. BUT I guess nobody told corporate bosses not to use a huge percentage of those piles of money to line pockets by buying back their own stock.
Granted, I am a mere bumpkin, and could be accused of not understanding the wonders of stock buybacks. And, oh my, some might accuse me of being anti-capitalism -- which I absolutely am not. (I have not given up the market.)
I have been questioning stock buybacks for the past few years, but the recent train derailment that has ruined East Palestine, Ohio, sent me on a search to see what Norfolk Southern has been doing with their corporate tax cut money.
What you can read in the following link is an announcement from Norfolk Southern dated almost exactly one year ago. The announcement is for the stock buyback program that began on April 1, 2022 -- on the heels of their previous stock buyback program.
Here's the link to the year-old announcement straight from Norfolk Southern:
Norfolk Southern Announces New $10 Billion Stock Repurchase Program
And here is the first paragraph from the above link:
Norfolk Southern Corporation (NYSE: NSC) today announced that its Board of Directors has authorized a new program for the repurchase of up to $10 billion of its common stock beginning April 1, 2022. The company’s current program will be terminated on March 31, 2022.
10 Billion Dollars!
And, yet, there goes Norfolk Southern, waltzing around trying to buy real people's lives with a few mil thrown in the kitty.
This is about ethics. This is about right and wrong. This is about all of us.
Norfolk Southern must pay up, but never, ever be allowed to make the call as to when and whether East Palestine is safe -- unless that smarmy CEO moves there, with his family, to stay.
Furious Buckeye and Furious American Boomer |
You have hit on two very serious/appropriate subjects, regarding this (and future) derailments AND tax cuts for the rich.
The tax law passed that primarily/overwhelmingly helped those who needed it the least, still sticks in my craw. All the bloviating about how companies would use the windfall to reinvest in their infrastructure and not just in stock buybacks to increase stock prices, has been shown to be absolutely false, just like in all the previous tax laws passed helping the richest people and large corporations.
When executive remuneration is tied to only a 1 fiscal year stock price gain, then short-term/myopic decisions will always be made to maximize the year-end bonus of those at the highest levels. I have said for a long time, that executive bonuses tied to stock prices/profits should be on a 3 year sliding scale, that forces upper management to look past just what will make them the most in a single year. And should key executives change in that 3 year period, it would still be easy enough to prorate the bonuses so that those no longer there will still benefit from their longer view/gains of the company.
As for the derailment, the tax cuts could/should have been used to shorten the distance between defect detectors, which have proved to be much more efficient than just adding crew members (many who just slept in the locomotives or on the bunks in the cabooses) to trains, that may or may not have been able to see the bearing getting hot in the first place.
The real issue however, is the fact that the threshold for determining when to stop/inspect a train because of increased temperature for bearings/wheels, is left
solely to each railroad -
NOT by federal law. Since stopping a train or setting out a bad car can jam up the entire system and cause a major impact to train performance (getting from point A to point B), railroads have decided to roll the dice and set the temperature threshold so high, that these occurrences are rare and only apply to the worst case scenarios. We can see how that has worked out, for the poor residents of Palestine.
My good friend (almost 50 years in the railroad industry, many at the executive/upper management level) predicts that the NTSB will recommend a law that requires all railroads to follow regarding a maximum distance between detectors, as well as a lower delta between ambient and component temperatures on rail cars.
He also mentioned that there has been bad blood between the NTSB and the Federal Railroad Administration (FRA) for many years (re: Positive Train Control), because the NTSB has no regulatory powers and only the FRA can promulgate/enforce federal regulations.
The bottom line is that when the head of the NTSB says "the incident was 100% preventable," yet the crew/protocols were also followed, it becomes pretty obvious that
something has to change so that more communities are not so adversely affected in the future - and companies can't just protect/enrich the highest paid already with tax cuts.