Earnings in a free fall, laying of thousands, but companies are still paying large dividends, because canceling them would drive the stock down, and put senior management stock options under water.

This story is not mentioning the whole control fraud aspect of this, but that is the reality, one that the authors completely ignore:

Since the coronavirus pandemic was declared, Caterpillar has suspended operations at two plants and a foundry, Levi Strauss has closed stores, and toolmaker Stanley Black & Decker has been planning layoffs and furloughs.

Steelcase, an office furniture manufacturer, and World Wrestling Entertainment have also shed employees.

And as thousands of their workers were filing for unemployment benefits, these companies also rewarded their shareholders with more than $700 million in cash dividends. They are not alone. As the pandemic squeezes big companies, executives are making decisions about who will bear the brunt of the sacrifices, and in at least some cases, workers have been the first to lose, even as shareholders continue to collect.

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Many large U.S. companies choose to issue a regular, quarterly dividend to shareholders, often increasing it, and they boast about these payments because they help keep the share price higher than it might otherwise be. Those companies might be reluctant to announce that they are cutting or suspending their dividend during a crisis, [deputy director of the Council of Institutional Investors Amy ] Borrus said.

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William Lazonick, an emeritus economics professor at the University of Massachusetts at Lowell, has been one of the leading critics of companies that distribute cash to shareholders through stock buybacks and dividends rather than reinvesting the profits into employees, innovation and production. For companies that are continuing to do buybacks and issue dividends during the crisis, he said, it is business as usual. The lion’s share of dividends goes to higher-income Americans, according to data from the Internal Revenue Service: about 69 percent of all dividends goes to taxpayers with incomes in excess of $200,000.

“In a downturn like this, the first thing a company should do is give up any distributions to shareholders,” Lazonick said. “But in a crisis, companies will differ. Some will care … and some will rob the workers, who should expect that their continued employment will be the company’s first concern.”

You cannot understand these actions unless you know that the senior management of these firms are rewarded almost entirely on the basis of stock price.

This is not a single minded focus on short term shareholder returns, which is bad, it is a single minded focus on THEIR returns.

They don’t carte if the company fails in 2 years, if they can cash in their stock options today.