House Democrats reintroduce bill targeting stock buybacks
U.S. Representative Jesus Garcia (D-IL) speaks against Title 42 during a news conference outside the U.S. Capitol in Washington, U.S. April 28, 2022.
Elizabeth Frantz | Reuters
WASHINGTON — House Democrats on Thursday reintroduced a bill that would ban open-market stock buybacks, weeks after the Securities and Exchange Commission issued strict rules for disclosing buybacks.
The paid work law would prohibit companies from increasing the value of their market shares by buying back shares on the open market. Lawmakers said it would also level the playing field for workers by preventing trillions from being spent on buyouts instead of wages.
The bill also “gives workers a voice on corporate boards,” said Rep. Jesus Garcia, D-Ill., one of the bill’s co-sponsors, on Thursday.
“Stock buybacks allow companies to buy stocks at their own price at the expense of workers, consumers and the American economy,” Garcia said. “Almost all companies participated in these practices.”
Representatives Ro Khanna, D-Calif., and Val Hoyle, D-Ore., also co-sponsored the bill. With Republicans holding a slight majority, the bill is unlikely to pass the House.
“It’s also critical and an important part of this bill that we give workers a voice commensurate with the value their work provides to the company,” Hoyle said Thursday.
US corporate stock buybacks have soared from a total of $950 billion in 2021 to more than $1.25 trillion last year, SEC Chairman Gary Gensler said earlier this month. -this.
The commission recently introduced rules from the fourth quarter of this year to increase transparency of takeover behavior and allow investors “better to evaluate issuer takeover programs” as corporate takeovers hit record highs. .
Last month, Google’s parent board Alphabet announced that it had approved $70 billion in share buybacks this year, matching its 2022 rate. Apple will also repeat its 2022 performance by buying back $90 billion of shares this year.
Garcia said the railroad company South Norfolk spent $3.4 billion on buyouts in the year before the February rail derailment in East Palestine, Ohio, which dumped dangerous chemicals in the area.
“Now Norfolk Southern plans to spend nearly 1,000 times the amount they pay victims: $7.5 billion in buyouts,” he said. “It’s money that could instead be spent on basic safety improvements and worker benefits.”
Norfolk Southern declined to comment on the legislation.
Record takeovers began in 1982 after the SEC passed a rule exempting takeovers, but the Tax Cuts and Jobs Act signed into law by former President Donald Trump also allowed companies to take over freely to pay shareholders and executives, lawmakers said. Executive compensation is also often tied to stock performance.
“We will need transformative change to refocus workers and consumers in our nation’s economy,” Garcia said. “And prohibiting share buybacks is a good place to start.”
Eleven Democratic members of the House, along with four senators, including Sen. Bernie Sanders, I-Vt., signed the reward labor law when it was first introduced in 2019. Garcia and Khanna reintroduced it the year last as a companion of legislation. proposed by Sen. Tammy Baldwin, D-Wis.