I mentioned last year a story about how former GE CEO Jeff Immelt not only flew around the world in a private plane, but had an another empty private plane follow him around just in case something happened to his main plane. This was all paid for with shareholder funds at a time in which GE was underperforming.
This is the type of corporate misbehavior that’s been fueling animus against capitalism by the youth. Another example might be the case of Tronc chairman Michael Ferro. Tronc owns the Chicago Tribune, LA Times, etc. Tronc instituted major newsroom cuts at the LA Times, then had the paper sign a $5 million consulting contract with Ferro’s firm. In effect, the LAT appears to have fired reporters in order to cut a huge check to the firm’s chairman.
However, in the last year I’ve noticed a major change in messaging by many large corporations. Apparently stunned by Trump’s presidential win, and wishing to avoid attracting his ire, they are taking great pains to speak loudly about their commitment to doing business in America and benefitting American workers.
For example, in the wake of the tax bill, many corporations like AT&T and Comcast announced they would be using their windfall to pay bonuses, give raises, set a $15 minimum wage for their employees, and/or hire more people. I believe somewhere around 50 major corporations have made these kinds of announcements.
Now, it’s not clear how substantial these are. Wal-Mart announced it was raising its starting wage and giving out some bonuses. It did this the same day it closed 63 Sam’s Club stores. Apple also made a splash with a major announcement that it would be repatriating its overseas cash pile and making many domestic investments. However, other than the repatriation and resulting $38 billion tax bill, it’s not clear how much of this is actually new vs. things they already planned to do. For example, they talk about 20,000 new jobs, but it’s not clear whether this is net hiring or merely gross hiring.
Regardless, this concern for, at a minimum, the optics of how they are conducting their business is a positive development. To the extent that there’s substance here, that’s great too. Let’s hope abusive management and executive self-enrichment at shareholder expense also start falling off.
Cover photo by Mike Kalasnik from Fort Mill, USA – CC BY-SA 2.0