One-hundred S&P 500 firms with the lowest median wages, a group we’ve dubbed the “Low-Wage 100,” blew $522 billion over the past five years on stock buybacks.
A Lowe's employee helps two customers look at flooring.
(Photo: MediaNews Group/Bay Area News via Getty Images)
Sarah Anderson
Aug 29, 2024
Inequality.org
The Lowe’s home improvement store spent $43 billion on stock buybacks over the past five years. With that sum, the big box chain could’ve given each of its 285,000 employees a $30,000 bonus every year between 2019 and 2023.
The extra cash would’ve meant a lot to Lowe’s workers—half of whom make less than $33,000 per year. Meanwhile, the retailer’s CEO, Marvin Ellison, raked in $18 million in 2023.
The evidence is stark. CEOs of leading U.S. corporations are focused on short-term windfalls for themselves and wealthy shareholders rather than on long-term prosperity for their workers—or their companies.
Another sign of Lowe’s skewed priorities? The company plowed nearly five times as much cash into buybacks as it invested in long-term capital expenditures like store improvements and technology upgrades over the past five years.
Lowe’s ranks as an extreme example of a corporate model focused on pumping up CEO pay at the expense of workers and long-term investment. But such skewed priorities are actually the norm among America’s leading low-wage corporations.
The Low-Wage 100
This year’s edition of the annual Institute for Policy Studies Executive Excess report finds that the 100 S&P 500 firms with the lowest median wages, a group we’ve dubbed the “Low-Wage 100,” blew $522 billion over the past five years on stock buybacks. Nearly half of these companies spent more on this once-illegal financial maneuver than they spent on capital investment vital to long-term competitiveness.
Why the fixation on buybacks? This is a CEO pay-inflating financial scam, pure and simple. When companies repurchase their own shares, they artificially boost share prices and the value of the stock-based compensation that makes up about 80% of CEO pay. An SEC investigation confirmed that CEOs regularly time the sale of their personal stock holdings to cash in on the price surge that typically follows a buyback announcement.
Our Executive Excess report also looks at low-wage corporations’ expenditures on employee retirement security. The answer? Peanuts, compared to their buyback outlays.
The country’s 20 largest low-wage employers spent nine times as much on stock buybacks as on worker retirement plan contributions over the past five years. Many of these firms boast of their “generous” matching benefits, typically a dollar-for-dollar match of 401(k) contributions up to 4% of salary. But matching is meaningless for workers who earn so little they can’t afford to set aside anything for what should be their “golden years.”
Take Chipotle, for instance. The Mexican fast food chain spent over $2 billion on stock buybacks over the past five years—48 times as much as the firm contributed to employee retirement plans. Meanwhile, 92% of Chipotle workers who are eligible to participate in the company’s 401(k) have zero balances. That’s hardly surprising, since the chain’s median annual pay is just $16,595.
The evidence is stark. CEOs of leading U.S. corporations are focused on short-term windfalls for themselves and wealthy shareholders rather than on long-term prosperity for their workers—or their companies.
As UAW President Shawn Fain put it in his primetime DNC convention speech: “Corporate greed turns blue-collar blood, sweat, and tears into Wall Street stock buybacks and CEO jackpots.”
Solutions to Executive Excess
Public outrage over CEO shakedowns helped the UAW win strong new contracts last year with the Big Three automakers. Support for policy solutions is growing as well. The Democratic Party platform calls for quadrupling a new tax on stock buybacks. And a recent poll shows huge majority support among Democrats, Republicans, and Independents alike for proposed tax hikes on corporations with huge CEO-worker pay gaps. The Executive Excess 2024 report offers an extensive menu of additional commonsense CEO pay reforms.
It’s important to remember that it hasn’t always been this way. Forty years ago, big company CEO pay was only about 40 times higher than worker pay—not several hundreds of times higher, as is typical today. And just 20 years ago, most big companies spent very little on stock buybacks. At Lowe’s, for example, buyback outlays between 2000 and 2004 were exactly zero.
Corporate America’s perverse fixation on enriching those at the top is bad for workers and bad for the economy. With pressure from below, we can change that.
The Lowe’s home improvement store spent $43 billion on stock buybacks over the past five years. With that sum, the big box chain could’ve given each of its 285,000 employees a $30,000 bonus every year between 2019 and 2023.
The extra cash would’ve meant a lot to Lowe’s workers—half of whom make less than $33,000 per year. Meanwhile, the retailer’s CEO, Marvin Ellison, raked in $18 million in 2023.
The evidence is stark. CEOs of leading U.S. corporations are focused on short-term windfalls for themselves and wealthy shareholders rather than on long-term prosperity for their workers—or their companies.
Another sign of Lowe’s skewed priorities? The company plowed nearly five times as much cash into buybacks as it invested in long-term capital expenditures like store improvements and technology upgrades over the past five years.
Lowe’s ranks as an extreme example of a corporate model focused on pumping up CEO pay at the expense of workers and long-term investment. But such skewed priorities are actually the norm among America’s leading low-wage corporations.
The Low-Wage 100
This year’s edition of the annual Institute for Policy Studies Executive Excess report finds that the 100 S&P 500 firms with the lowest median wages, a group we’ve dubbed the “Low-Wage 100,” blew $522 billion over the past five years on stock buybacks. Nearly half of these companies spent more on this once-illegal financial maneuver than they spent on capital investment vital to long-term competitiveness.
Why the fixation on buybacks? This is a CEO pay-inflating financial scam, pure and simple. When companies repurchase their own shares, they artificially boost share prices and the value of the stock-based compensation that makes up about 80% of CEO pay. An SEC investigation confirmed that CEOs regularly time the sale of their personal stock holdings to cash in on the price surge that typically follows a buyback announcement.
Our Executive Excess report also looks at low-wage corporations’ expenditures on employee retirement security. The answer? Peanuts, compared to their buyback outlays.
The country’s 20 largest low-wage employers spent nine times as much on stock buybacks as on worker retirement plan contributions over the past five years. Many of these firms boast of their “generous” matching benefits, typically a dollar-for-dollar match of 401(k) contributions up to 4% of salary. But matching is meaningless for workers who earn so little they can’t afford to set aside anything for what should be their “golden years.”
Take Chipotle, for instance. The Mexican fast food chain spent over $2 billion on stock buybacks over the past five years—48 times as much as the firm contributed to employee retirement plans. Meanwhile, 92% of Chipotle workers who are eligible to participate in the company’s 401(k) have zero balances. That’s hardly surprising, since the chain’s median annual pay is just $16,595.
The evidence is stark. CEOs of leading U.S. corporations are focused on short-term windfalls for themselves and wealthy shareholders rather than on long-term prosperity for their workers—or their companies.
As UAW President Shawn Fain put it in his primetime DNC convention speech: “Corporate greed turns blue-collar blood, sweat, and tears into Wall Street stock buybacks and CEO jackpots.”
Solutions to Executive Excess
Public outrage over CEO shakedowns helped the UAW win strong new contracts last year with the Big Three automakers. Support for policy solutions is growing as well. The Democratic Party platform calls for quadrupling a new tax on stock buybacks. And a recent poll shows huge majority support among Democrats, Republicans, and Independents alike for proposed tax hikes on corporations with huge CEO-worker pay gaps. The Executive Excess 2024 report offers an extensive menu of additional commonsense CEO pay reforms.
It’s important to remember that it hasn’t always been this way. Forty years ago, big company CEO pay was only about 40 times higher than worker pay—not several hundreds of times higher, as is typical today. And just 20 years ago, most big companies spent very little on stock buybacks. At Lowe’s, for example, buyback outlays between 2000 and 2004 were exactly zero.
Corporate America’s perverse fixation on enriching those at the top is bad for workers and bad for the economy. With pressure from below, we can change that.
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