So people in management positions, have given themselves “bonuses” and stocks? It’s been this way as long as I was aware. (So I guess about the last 10 years) People in position of power use it to cash grab. I wish this was more surprising news, not the accepted status quo. I wonder what will be the financial consequences of these practices. Another market crash?
You miss the magnitude when you look at it this way. Consider: Texas Instruments is a publicly-traded company. By rights, you or I or anyone we know should be able to put down $120 and grab a share of Texas Instruments. What we should get out of that, aside from the warm fuzzy feeling of being a part owner of a multinational conglomerate, is the opportunity to sell our share for more or less in the future and our portion of the profits made by Texas Instruments every quarter. We call this the dividend. Texas Instruments has given out about $9 per share in dividends over the past five years. So for thee or me, we're making ten percent. yay! That cost them $9b. But Texas Instruments has also spent $4b buying shares from its fourteen directors for double the market value: Over that same time span, Texas Instruments sold 90.8 million shares to management and board members as they exercised options and restricted stock grants, for a total of $2.5 billion. That works out to an average sale price of $27.51. The difference in average purchase price and average sale price, multiplied by the number of shares so affected, is the direct monetary benefit for management. This is true whether or not management sells their new shares into the buyback or holds them. That amount works out to be $3.6 billion. So. The schlubs on eTrade made $9 a share. The board of directors get $185,000,000 each. It was either Graeber in Debt: the first 5000 years or Piketty in Capital in the 21st century who observed that historically, there have been two orders of magnitude difference between wages at the bottom of any structure vs. the top. Pope brings in 100x what the village priest does. Roman general brings in 100x what the lowliest centurion does. this was true of the managerial class until about 1990 or so. Jon Ronson hunted out six degrees of income separation in the United States in 2012.So people in management positions, have given themselves “bonuses” and stocks? It’s been this way as long as I was aware.
From 2014 through 2018, Texas Instruments bought back 228.6 million shares for $15.4 billion. That works out to an average purchase price of $67.37.
Adam Neumann ran up five.hundred.million.dollars in debt ahead of WeWork's IPO. As part of making him go away so they could douse the flames and cut the carcass up for dogfood, Softbank waved their hands and made that debt go away. They're also gonna let him sell the shares he has in the company for $200m. Adam Neumann is going to make seven.hundred.million.dollars for losing more money as a landlord than anyone in the history of rent. Elizabeth Holmes batted her eyes at her next door neighbor and convinced him she could revolutionize blood chemistry after one semester of Chem 101 at Stanford. Investors piled eight.hundred.million dollars into it not because they understood how it worked, but because they knew someone who said it would work and that they could sell it for more to someone else. Travis Kalanick convinced people to give him twenty.five.billion dollars on the idea that you don't have to follow livery laws. Now you know where that money comes from.