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Corbyn wants to ban Co.'s which don't pay living wage from paying dividends Watch

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    The logic kinda works. A big argument from a lot of companies against paying living wage is 'they can't afford it'. Well, if you can't afford to pay living wage, you can't afford to pay dividends, can you?
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    (Original post by Jammy Duel)
    I suspect he will mean the over inflated "living wage with major comforts" as given by the living wage foundation rather than the "national living wage"

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    You may be right but again this shows his naivety. Effectively the Tories have nicked the living wage idea (for these purposes the rate paid is irrelevant. It is the name that matters) and they may nick his shareholder sanctions idea. Oppositions have to carefully manage their ideas to get the credit for them. "Please sir, please sir, I thought of it first" doesn't play well with voters.
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    (Original post by abruiseonthesky)
    The logic kinda works. A big argument from a lot of companies against paying living wage is 'they can't afford it'. Well, if you can't afford to pay living wage, you can't afford to pay dividends, can you?
    Most companies pay out dividends around 2%. The salary increase to go from minimum wage the living wage (as it currently stands) is 23%. A significant difference.

    Remember; dividends are to attract investors (and so funds for expansion) so reducing this will restrict investment for these companies to expand. Increased risk of them losing market share to competitors and ultimately; redundancies for those very employees Comrade Corbyn is trying to save.
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    (Original post by abruiseonthesky)
    The logic kinda works. A big argument from a lot of companies against paying living wage is 'they can't afford it'. Well, if you can't afford to pay living wage, you can't afford to pay dividends, can you?
    Which shows a fundamental misunderstanding of what "cannot afford" really means. It means it cannot be afforded whilst still making their target profit, something that paying a divided has no impact on. It's akin to somebody saying they're saving up for a deposit on a house, say, and are thus setting aside £x a month and when asked if they want to go to the pub they say that they cannot afford it. They may well be able to afford it but not without dipping into that £x they intend to set aside.

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    (Original post by Reue)
    Most companies pay out dividends around 2%. The salary increase to go from minimum wage the living wage (as it currently stands) is 23%. A significant difference.

    Remember; dividends are to attract investors (and so funds for expansion) so reducing this will restrict investment for these companies to expand. Increased risk of them losing market share to competitors and ultimately; redundancies for those very employees Comrade Corbyn is trying to save.
    Think about the sort of businesses that use this argument though - it's never the small-medium sized, it's always the huge companies (e.g. Amazon).
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    (Original post by Jammy Duel)
    Which shows a fundamental misunderstanding of what "cannot afford" really means. It means it cannot be afforded whilst still making their target profit, something that paying a divided has no impact on. It's akin to somebody saying they're saving up for a deposit on a house, say, and are thus setting aside £x a month and when asked if they want to go to the pub they say that they cannot afford it. They may well be able to afford it but not without dipping into that £x they intend to set aside.

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    Think about the sort of businesses that use this argument though - it's never the small-medium sized, it's always the huge companies (e.g. Amazon).
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    (Original post by viddy9)
    CEOs simply don't deserve the extraordinary pay that they're getting today.
    I think that's a bit of a generalisation.

    I'll happily agree that there are probably many who don't deserve the pay, but you can't ignore the fact that there are numerous who do.

    The CEO where I work has come in after a period of chronic mismanagement where the company almost went bankrupt, it's now the leading performer in the sector after less than 2 years. He has definitely earned his money.
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    (Original post by abruiseonthesky)
    Think about the sort of businesses that use this argument though - it's never the small-medium sized, it's always the huge companies (e.g. Amazon).
    iirc - Amazon operates incredibly lean to support it's business model. Even a tiny increase in overall employee wages is likely to have a huge impact on margins.
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    (Original post by abruiseonthesky)
    Think about the sort of businesses that use this argument though - it's never the small-medium sized, it's always the huge companies (e.g. Amazon).
    I don't remember the last time I saw any small-medium business scrutinised over anything really, particularly in the national press, it's also worth noting that most of these small-medium businesses aren't going to be floated either which does slightly change the way it all works, not least it all being behind the scenes. So of course it's going to be the big companies people complain about, they're very visible and employ a lot of people, and just because you didn't hear about something doesn't mean it didn't happen.

    What does anybody care if your local corner shop doesn't do x, y, z it probably isn't even a big enough thing for the local rag to waste space on.

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    (Original post by Reue)
    Most companies pay out dividends around 2%. The salary increase to go from minimum wage the living wage (as it currently stands) is 23%. A significant difference.

    Remember; dividends are to attract investors (and so funds for expansion) so reducing this will restrict investment for these companies to expand. Increased risk of them losing market share to competitors and ultimately; redundancies for those very employees Comrade Corbyn is trying to save.
    This.


    There is risk in buying shares and to repay an investor for the risk taken on, you generally expect dividends greater than you would earn if you put your money in a savings account. If Corbyn were actually let loose on British business, people would begin to question the purpose of buying shares in British companies, it would be a disaster.


    Also people defending Corbyn need to bear in mind that people who own shares are not all Russia billionaires but normal working people who use it to supplement retirement income. It's easy to manufacture consent for destroying successful companies when you pretend the only people who will suffer are people rich enough to take the hit, even if it's not accurate.
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    (Original post by nulli tertius)
    I am sorry. This $20Bn did not come from the magic money tree. I cannot engage with people who not accept basic tenets of economics.
    Well, it also has to be considered how it was paid, was it a single 20bn lump sum or paid over several periods, but profits and dividends do not necessarily have a very strong correlation. If BP had the cash reserves there was nothing saying they could not pay dividends based on the underlying performance. But hey, if less money means smaller dividends and logically then more money means higher dividends, where are the dividends for apple investors, they definitely don't lack the cash?

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    Just so everyone here is clear, if he actually gets elected and introduces a salary ratio where the highest paid cannot be paid a certain amount more than the lowest paid, lots of companies are going to stop operating in this country.

    On the other point about dividends, people are paid what they are worth. If someone is paid the minimum wage it is because they are not worth more money. If an executive is paid millions a year, that is because they are worth that much money (see apples stocks when Steve Jobs died, or Microsoft's when they replaced their CEO)
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    (Original post by abruiseonthesky)
    The logic kinda works. A big argument from a lot of companies against paying living wage is 'they can't afford it'. Well, if you can't afford to pay living wage, you can't afford to pay dividends, can you?


    Dividends are essentially a reward for giving the company a (fairly) risky loan. So actually it does make sense that dividends are paid when the company can afford to do so.



    Investors have taken a direct risk to their personal savings, I don't see why in your mind they should be so low down in terms of their priority for compensation.
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    (Original post by djh2208)

    On the other point about dividends, people are paid what they are worth. If someone is paid the minimum wage it is because they are not worth more money. If an executive is paid millions a year, that is because they are worth that much money (see apples stocks when Steve Jobs died, or Microsoft's when they replaced their CEO)
    Not entirely true, because of minimum wage legislation there is a lower floor to pay so there are millions being paid more than they're worth.

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    (Original post by Jammy Duel)
    Not entirely true, because of minimum wage legislation there is a lower floor to pay so there are millions being paid more than they're worth.

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    I don't agree with wage fixing at all but it's one thing trying to convince Corbyn's comrades that minimum wage workers don't deserve to be paid more and another thing trying to convince them that many are paid too much.
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    LOL gl.

    #Capitalism
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    (Original post by Jammy Duel)
    Well, it also has to be considered how it was paid, was it a single 20bn lump sum or paid over several periods, but profits and dividends do not necessarily have a very strong correlation. If BP had the cash reserves there was nothing saying they could not pay dividends based on the underlying performance. But hey, if less money means smaller dividends and logically then more money means higher dividends, where are the dividends for apple investors, they definitely don't lack the cash?

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    There is no simple correlation between a single years' profits and a dividend and I did not suggest there was. That was Reue's invention. Unless like the late Lord Weinstock you keep a very large cash pile doing nothing, any expenditure with no return will have an impact on a business. The original point was that any penalty on a company impacts the shareholders despite them not being responsible for the wrongdoing. It certainly doesn't impact those at fault except to the extent that their financial rewards are linked to the performance of the company. To regard a punishment on a company as being without consequence to shareholders is, I am afraid nonsense.
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    (Original post by djh2208)
    I don't agree with wage fixing at all but it's one thing trying to convince Corbyn's comrades that minimum wage workers don't deserve to be paid more and another thing trying to convince them that many are paid too much.
    Bit of does not change the fact that many legally must be paid more than they're worth

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    (Original post by Reue)
    Non-board level employee pay is not the responsability of an audit committee.

    Also: Why punish investors for management's illegal actions?
    It does punish management, because share prices will fall.

    Investors will be "punished" either way, because company fines/court cases due to non-compliance with the law are going to be awful for share prices.



    (Original post by Reue)
    Most companies pay out dividends around 2%. The salary increase to go from minimum wage the living wage (as it currently stands) is 23%. A significant difference.
    These aren't percentages of the same numbers, and hence aren't comparable.
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    (Original post by JuliusDS92)
    It does punish management, because share prices will fall.

    Investors will be "punished" either way, because company fines/court cases due to non-compliance with the law are going to be awful for share prices.
    If they are already getting punished through share price, why double it up with dividends?

    (Original post by JuliusDS92)
    These aren't percentages of the same numbers, and hence aren't comparable.
    One is a % of, the other is a % increase. Without going into the full financial accounts to find total figures for shareholder capital and headcount expenditure it's the best comparison available.
 
 
 
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