June 12, 2018

Public Citizen Lauds Stock Buyback Reform

Statements of Public Citizen Experts

Note: U.S. Rep. Keith Ellison (D-Minn.) today introduced the Reward Work Act, a companion to a U.S. Senate bill sponsored by U.S. Sen. Tammy Baldwin (D-Wis.) that reforms rules for corporate stock buybacks. Separately, U.S. Securities and Exchange Commissioner Robert Jackson on Monday called for a rulemaking to address the same issue of record corporate stock buybacks. Corporations that spend their earnings – now larger because of tax giveaways – on their own stock hurt workers who could otherwise benefit from these funds through a raise, more training or an expanded workforce.

“Ellison and Jackson rightly diagnose the problem with stock buybacks, especially following President Donald Trump’s massive corporate tax giveaway. Instead of reinvesting in workers, corporations are sending their tax benefits to the stock market, further enriching those already flush with wealth. By reforming basic anti-manipulation rules, Ellison and Jackson’s efforts would go a long way toward promoting investment in American companies.”

- Susan Harley, deputy director, Public Citizen’s Congress Watch division

“Executives who repurchase shares too often manipulate the price to boost their own stock-based pay. Stock buybacks sap economic potential to grow the economy. CEOs declare surrender when they repurchase shares, claiming they can’t use this capital to invest in their corporations and workers. Behind this white flag, in fact, are billions in misallocated capital to pad CEO pay. Americans who understand the perversions of outsized CEO compensation enthusiastically welcome Ellison and Jackson’s efforts.”

- Bartlett Naylor, financial policy advocate, Public Citizen’s Congress Watch division

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