[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

[OrangeBlossomBaby]

It isn't just that. A previous administration's rollback on EPA guidelines for hazardous material contributed to the disaster. However - another rollback, which was on the faster brakes for trains with flammable/hazardous cargo would not have applied to this particular train, as it was a mixed-use train and the disaster would've happened anyway since it was a busted wheel bearing that caused it.

[kkingston57]

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

Per preliminary report, this was caused by an over heated wheel bearing. If so, this rail road is going to pay big to people and property who were damaged.

[Gpsma]

And the rail workers followed the corrct procedure!

Oh, the evil big corporations. OP, got a pension, got investments?..im guessing you do…and these evil corporations are provising u with an income in retirement.

[Keefelane66]

Originally Posted by OrangeBlossomBaby

It isn't just that. A previous administration's rollback on EPA guidelines for hazardous material contributed to the disaster. However - another rollback, which was on the faster brakes for trains with flammable/hazardous cargo would not have applied to this particular train, as it was a mixed-use train and the disaster would've happened anyway since it was a busted wheel bearing that caused it.

Just another loophole to get around any type of regulations. Trains operate today breaking hasn't been upgraded since 1872 developed by Westinghouse

[CoachKandSportsguy]

Boomer!

You are describing corporatism, where the corporation and its stock price come first!
Corporatism is more inefficient as you get towards the mgmt top because the egos lose rational thought and spend shareholder money for their interests, even non buybacks investments start to get self centered as the best for them vs the company
Its the sign of advanced economic financialization of the world, where all that matters are dollars and return stories and shareholder spin.

For the rest of the people who miss Boomer's point completely, just focusing on the cause of either brakes, (not breaks) or bearings (not barings) , the $10 billion of cash being spend on stock should be spent on better maintenance, upgrading brakes to stop faster, replacement cars for old worn out cars, more track inspections and repairs, etc

Just like UHC thinking that insurance company's can't lose money anywhere, and must grow profits by becoming a near monopoly negotiating lower and lower rates for higher profits and bonuses. human greed has been known to wreck nice situations. . .

I have friends who are in accounting and finance in very large companies, in different industries, who have seen corporatism in many ways, and seen people go to the pokey for same, and it just keeps happening. The power ascent occurs in business as well as politics, where ever the perceived power and influence. Jack Welsh was one of the big influences and trend starters, and working with former GE executives, you can see who worshipped Jack and were Jack wannabes, and who hated Jack, there are few in between. .

future former finance guy

[Carla B]

Thank you Boomer, for doing this research and Finance Guy, for putting a name to corporate misbehavior. I wonder if there even is a large corporation in today's environment which has used the tax windfall to improve how it functions.

Are there any corporations that have followed the "primary service objective," as taught in graduate business school, at least in olden days. Rather than just focusing on rewarding themselves, it was a directive to corporate management to do the best they could to satisfy the customer which, in turn, would result in building a stronger corporation.

[Caymus]

Originally Posted by CoachKandSportsguy

Boomer!

You are describing corporatism, where the corporation and its stock price come first!
Corporatism is more inefficient as you get towards the mgmt top because the egos lose rational thought and spend shareholder money for their interests, even non buybacks investments start to get self centered as the best for them vs the company
Its the sign of advanced economic financialization of the world, where all that matters are dollars and return stories and shareholder spin.

For the rest of the people who miss Boomer's point completely, just focusing on the cause of either brakes, (not breaks) or bearings (not barings) , the $10 billion of cash being spend on stock should be spent on better maintenance, upgrading brakes to stop faster, replacement cars for old worn out cars, more track inspections and repairs, etc

Just like UHC thinking that insurance company's can't lose money anywhere, and must grow profits by becoming a near monopoly negotiating lower and lower rates for higher profits and bonuses. human greed has been known to wreck nice situations. . .

I have friends who are in accounting and finance in very large companies, in different industries, who have seen corporatism in many ways, and seen people go to the pokey for same, and it just keeps happening. The power ascent occurs in business as well as politics, where ever the perceived power and influence. Jack Welsh was one of the big influences and trend starters, and working with former GE executives, you can see who worshipped Jack and were Jack wannabes, and who hated Jack, there are few in between. .

future former finance guy

Does Buffet manage his railroad any better?

[manaboutown]

The crew possibly ignored three warnings before acting.

"According to the report, the train contained a detection system that scans for temperature differences and other mechanical warnings. When it passed the first of three mileposts containing heat detectors, the suspected bearing had a recorded temperature of 38 degrees Fahrenheit above ambient temperature. By the second, it was 103 F above ambient.

By the third milepost, the suspect bearing was 253 F above the ambient temperature. Norfolk Southern’s guidelines say that if a difference between bearings on the same axle is greater than 200 F, the situation is determined to be “critical” and engineers need to “set out” the car for maintenance.

The report added that when the train passed a milepost on the east side of East Palestine, the detector transmitted a “critical audible alarm message” due to an overheated wheel bearing. The message instructed the crew to “slow and stop the train to inspect a hot axle.”

The engineer engaged the brake application to further slow and stop the train, but an automatic emergency brake application initiated, causing the train to come to a stop. The crew observed fire and smoke and notified the dispatcher of a possible derailment."


Federal safety board releases initial report on Ohio derailment - Roll Call

[Bill14564]

I learned a long time ago, by doing puzzles in books, that just because there are dots on the page doesn't mean there are lines that connect them. Despite the Monday-morning quarterbacking, there is no indication at this point of any negligence on the part of the railroad. Many more facts are needed before this event can be blamed on an otherwise smart business decision.

[Boomer]

Originally Posted by CoachKandSportsguy

Boomer!

You are describing corporatism, where the corporation and its stock price come first!
Corporatism is more inefficient as you get towards the mgmt top because the egos lose rational thought and spend shareholder money for their interests, even non buybacks investments start to get self centered as the best for them vs the company
Its the sign of advanced economic financialization of the world, where all that matters are dollars and return stories and shareholder spin.

For the rest of the people who miss Boomer's point completely, just focusing on the cause of either brakes, (not breaks) or bearings (not barings) , the $10 billion of cash being spend on stock should be spent on better maintenance, upgrading brakes to stop faster, replacement cars for old worn out cars, more track inspections and repairs, etc

Just like UHC thinking that insurance company's can't lose money anywhere, and must grow profits by becoming a near monopoly negotiating lower and lower rates for higher profits and bonuses. human greed has been known to wreck nice situations. . .

I have friends who are in accounting and finance in very large companies, in different industries, who have seen corporatism in many ways, and seen people go to the pokey for same, and it just keeps happening. The power ascent occurs in business as well as politics, where ever the perceived power and influence. Jack Welsh was one of the big influences and trend starters, and working with former GE executives, you can see who worshipped Jack and were Jack wannabes, and who hated Jack, there are few in between. .

future former finance guy

Thank you future former finance guy for expanding on my point -- and for adding a new word 'corporatism' to my vocabulary.

Ah, yes, "Neutron Jack" -- I heard a lot about him during his reign at GE because I know people who worked there. Welch ran GE from 1981 to 2001 and eventually pretty much eviscerated the company.......

It was never enough for Welch to stick to jet engines, locomotives, light bulbs, appliances -- all the stuff that had built the company into one of those stocks that let shareholders sleep at night......

But Welch's narcissistic personality drove his unrestrained greed. One of the things he did was position GE in finance. He could see the rah-rah of finance and wanted a piece of the action. He left GE, not long before the financial crisis. He took a record-breaking 417 million severance with him, as he left GE cruising for a fall. And fall it did. Never to be the same.

During Welch's tenure at GE, he had a practice of ranking employees and automatically firing the bottom 10%.

I am from Cincinnati and for decades, if you had a job at P&G which is headquartered in Cincy or at GE, you were well set.

P&G is still moving along, not the most exciting stock, but PG has paid a dividend since 1890 and has increased its dividend for 66 consecutive years. (PG usually announces the increase in April and starts paying at that amount with the May dividend.) PG has been known for its profit-sharing. I don't know if it's what they do anymore, but for many, many years, employees got stock -- and many of PG's retirees have held those long accumulated shares for decades -- for the dependable dividend. I cannot even begin to figure out what the actual dividend yield is on a share of PG held for 50-plus years, through ups and downs and split after split, consistently belching out those increasing dividends.

Long term dividend investing is often misunderstood. People look at the current yield, which is 2.60% for PG at this moment for an annual $3.65 per share check-in-the-mail. But if that share is decades old, the math to see the actual percentage for yield, when figured on cost basis of a really old share, makes some interesting, simple math.

Of course, there is no such thing now as a job for life and company loyalty. A few years ago, P&G streamlined back to their most profitable products. And PG has done stock buybacks, just like all the rest.

But having lived most of my life in a town where P&G and GE were both once THE places to work, and knowing many people who worked for either, I have up-close and personally seen how each of those company's employees and shareholders feel about what is happening or has happened to them.

There is a recent book about Jack Welch. The title is The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America -- and How to Undo His Legacy. (I have not read it. I just heard about it. That long title says a whole lot.)

Again, thank you for picking up on the point I was trying to make. When acknowledging the influence of behavioral economics when choosing investments, the behavior of the CEO should be taken into consideration. All CEOs are not created equal.

I remain needing directions to the vomitorium as I see that CEO of Norfolk Southern spew the company line in the faces of people whose lives have been changed forever. Those who side with him and spew their own broad statements, I guess must think the taxpayers should pick up the bill on this one.

(I have just written a whole lot of words, this morning, and I have lots of things to do in my real life and I need to get out of here.. . .and I hesitate to write this next sentence because I do not want this to turn political. . . But I must say that I keep (probably naively) hoping that the two senators from Ohio will reach across the aisle to join and lead forces to take care of the people of East Palestine. I keep hoping this is Ohio's moment to be an example for what this country needs -- getting back to the people.)

Boomer

[Pairadocs]

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

The "evils" of capitalism versus the alternative economies, is an age old debate. You are absolutely correct, most incidents boil down to "ethical" conduct. In this case you identified THE important element....to put it simply, the tax changes did NOT require ONLY reinvestment which, probably, many of us, including myself, was the point !

Look of the many coal mine disasters in our country, and the unethical acts of pharmaceutical manufacturers, auto manufactures, Three Mile Island nuclear tragedy, etc. etc. Then, take a look at the alternatives to a capitalist system, outcome of the many coal mine disasters in China, a communist country, or outcomes of such disasters in dictatorships ? I don't know about you, but I contemplate this frequently. Last night we watched a history of Stalin's reign, from his rise as a philosophical believer in Marx, Trotsky, Lenin, and others, a kind of UP with the oppressed, the workers, an equal share for ALL, to his ACTUAL actions and behaviors. Collective agriculture (government control of food and grain) resulted in millions and millions of deaths from starvation. In Venezuela, one of the most oil rich countries in the world, people resorted and eating domestic and zoo animals as a result of choosing an alternative to the greedy, evil, capitalist system. So, it's a complex choice we make, and it involves qualitative characteristic which can't be predicted. Choosing capitalism, provides a high standard of living, even for the lowest level of society, but the "trade off" is non government owned entities MUST also produce profits for those who invest in them (individuals like you and I, but also unions and organizations who rely on those investments to be able to pay pensions to their members). It all boils down to the ethical (some might term it "spiritual") base of the human beings involved (CEO's, CFO's, board members, share holders, etc.) A LOT to consider in these cases ! Southern is definitely responsible... drip drip drip... with each day that passes we find out more steps they "could" have taken. If this finally results in the demise of one of our major providers of movement of goods in this country, how will it effect each of us in our daily lives ? Remember the "too big to fail" concept (banks, auto makers, and so on) ? As we slowly move to more government control, will that finally guarantee that only highly ethical people will be in control ? ? We have MAJOR decisions ahead of us all !

[Stu from NYC]

Originally Posted by Pairadocs

The "evils" of capitalism versus the alternative economies, is an age old debate. You are absolutely correct, most incidents boil down to "ethical" conduct. In this case you identified THE important element....to put it simply, the tax changes did NOT require ONLY reinvestment which, probably, many of us, including myself, was the point !

Look of the many coal mine disasters in our country, and the unethical acts of pharmaceutical manufacturers, auto manufactures, Three Mile Island nuclear tragedy, etc. etc. Then, take a look at the alternatives to a capitalist system, outcome of the many coal mine disasters in China, a communist country, or outcomes of such disasters in dictatorships ? I don't know about you, but I contemplate this frequently. Last night we watched a history of Stalin's reign, from his rise as a philosophical believer in Marx, Trotsky, Lenin, and others, a kind of UP with the oppressed, the workers, an equal share for ALL, to his ACTUAL actions and behaviors. Collective agriculture (government control of food and grain) resulted in millions and millions of deaths from starvation. In Venezuela, one of the most oil rich countries in the world, people resorted and eating domestic and zoo animals as a result of choosing an alternative to the greedy, evil, capitalist system. So, it's a complex choice we make, and it involves qualitative characteristic which can't be predicted. Choosing capitalism, provides a high standard of living, even for the lowest level of society, but the "trade off" is non government owned entities MUST also produce profits for those who invest in them (individuals like you and I, but also unions and organizations who rely on those investments to be able to pay pensions to their members). It all boils down to the ethical (some might term it "spiritual") base of the human beings involved (CEO's, CFO's, board members, share holders, etc.) A LOT to consider in these cases ! Southern is definitely responsible... drip drip drip... with each day that passes we find out more steps they "could" have taken. If this finally results in the demise of one of our major providers of movement of goods in this country, how will it effect each of us in our daily lives ? Remember the "too big to fail" concept (banks, auto makers, and so on) ? As we slowly move to more government control, will that finally guarantee that only highly ethical people will be in control ? ? We have MAJOR decisions ahead of us all !

If the upper levels of management were held criminally responsible for negligently not keeping their companies safe for others than perhaps things would be different.

If Norfolk Southern has to fork over say 5 billion dollars to fix what they created the board of directors and major stockholders would and should force a change in management.

I understand why corporations buy back stocks. They do it to make the remaining shares more valuable when internal investments do not look more promising.

Presumably the cash that comes back to stockholders are reinvested in other companies.

Understand the too big to fail concern but when bailouts occur the former management should be shown the door with a quick kick in the ____.

[Johnsocat]

Originally Posted by Keefelane66

Just another loophole to get around any type of regulations. Trains operate today breaking hasn't been upgraded since 1872 developed by Westinghouse

I have my Grandmother's Westinghouse toaster and it works great!
Brakes on this train were just fine. Not the cause of, nor a contributing factor, in this derailment.

[loweglor]

It is wonderful to see someone post something sensible about those so called tax cuts that made the wealthy wealthier and the rest of us just scratching our heads. It amazes me how so many people are willing to believe that corporations care about them. This is America and it is nothing like what our forefathers wanted. It's become what they came here to avoid.