We need to call this what it is: looting.
Stock buybacks are popular because senior executive’s compensation is largely in the form of stock options, so by buying back the stock, they are taking money that should be spent on new products, new plants, and new equipment, and putting it in their own pockets.
The job cuts are popular because the leeches on Wall Street flock to stocks of companies that lay off lots of people, further lining the pockets of sociopathic executives.
It should noted that this behavior was considered illegal stock manipulation until the adoption of SEC Rule 10b-18 in 1982 under the Reagan administration.
It might have been the worst decision of the whole Reagan administration, and that’s saying a lot.
“We recognize the need to stay in front of changing market conditions and customer preferences,” explained GM CEO Mary Barra in perfect corporate-speak in the statement released this morning, as employees are fretting about their jobs.
The phrase, “changing market conditions,” in regular English means that sales are skidding in the US despite enormous incentives. GM’s new-vehicle deliveries in the US plunged 11% in the third quarter and are down 1.2% for the year. In Canada, GM’s sales have dropped 1.6% so far this year. GM apparently expects these “market conditions” to worsen further, and it’s getting ready for it.
So GM is going to cut 15% of its salaried workers and salaried contract workers. At the end of 2017, GM had 54,000 salaried workers in North America. Of them 52,000 are in the US.