Concerning the report of certain corporate dividends continuing unabated during this downturn in business activity a reader writes:
I work at Caterpillar. I was there the day they announced the layoffs. I was there the day they announced that everyone’s merit increase had been rescinded . . . 1 day before they were to go into effect due to the business slowdown caused by COVID-19 and other business conditions. And then the very next day our CEO announced that the stock dividend for the quarter would remain the same as it was the previous quarter. And I remember thinking at that time, uh oh, this is not going to look good. In fact, it looks like our salary increases and the salaries of those let go went to pay for the quarterly dividend. That is the executive board’s decision to make, but it strikes me as a clear message that shareholders are valued over employees. As an employee, I understand the need at this time to cut costs, but it seems to me that shareholders also need to have some skin in the game. But what really irritated me was when the CEO released a video talking about the quarterly results and when explaining why the dividend was not reduced, he actually used the proverbial “We have many investors who rely on that dividend income in their retirement.” And those people that were laid off didn’t rely on that income, I suppose? Very tired of corporate America always trying to con us into thinking Grandma and Grandpa are the investors counting on stock dividends and prices when it’s so obvious that the shareholders who have the majority of the stock are investment firms and other companies, not Joe and Mary from down the street.
Corporate execs often hold immense numbers of shares as well, which is generally seen as a good thing, right up until we realize those execs are married to the quarterly numbers.
And, sadly, for titans like CAT, it’s not as if they have competitors biting at their heels. Maybe I’ll decide to build a house next year, but I won’t be able to specify that the builders not use CAT-supplied gear, now will I? Thus topples one of the pillars of free market capitalism.
