Touch the Soil News #364
We perceive the 2016 Presidential Election to be important – because we believe whoever is President will have great power over our future. However, is it possible there are powers as strong as political power? Powers that – in addition to control over food – exert influence on the political system.
Is there evidence of this power? Consider what happens when consumers want something better out of the food chain. To get change, people must employ protests, boycotts, letters and smoozing politicians – which can take years even decades to get action. The opposition to positive change is tremendously powerful. Consider how long folks have called for cage-free eggs, antibiotic-free meats, GMO labeling or the banning of bee killing-insecticides?
To understand hidden power is to follow the money trail. Where is the money going that large corporations struggle to garner? A struggle that can easily default to poor stewardship of employees, the planet, animals and plants.
The financial, political and media resources of powerful groups of investors allows them to control corporate power. In addition, trillions of dollars of 401K and pension-fund dollars from the average American are used (mostly without awareness by the folks whose money is being used) to finance corporate control.
Often times, corporations and their executives are vilified for not doing the right thing. Unfortunately, many executives are under constant pressure to deliver stockholder demands. History has proven that when CEOs retire, they often are different people with a sense of social and planetary stewardship that would shock most observers. The corporation is simply a legal shell whose purpose for existence is extracting the maximum amount of wealth from the earth, employees, customers and facilities.
The New York Stock Exchange, where equities in corporations valued at approximately $20 trillion are traded. The NYSE is one place where stock traders, speculators and manipulators wrestle for gain and position. These s high-stakes games externalize millions of workers. (Photograph by Mike Peel (www.mikepeel.net).)
To illustrate the point we will look at key financial disclosures and the CEO comments of a large food company – Tyson Foods, Inc. This is not intended to vilify Tyson. On the contrary, Tyson Foods is simply a surface expression of the demands that capital (stockholders) make.
Tyson is one of the world’s largest food (meat) companies. It owns many of the brands that are household names including: Jimmy Dean, Hillshire Farm, Sara Lee, Ball Park, Wright, Aidells and State Fair. While sales in the U.S. are the largest, Tyson sold products in approximately 130 countries around the globe. Tyson is also an organization of some 113,000 employees hanging on for economic survival – employees who exert limited financial or management power within the company.
When announcing the results of 2015, virtually every comment by CEO Donnie Smith was about how Tyson is delivering more money and company equity to stockholders. Here is how 2015 shakes out:
- Cash payments to stockholders went up from $104 million in 2014 to $147 million in 2015 – a 41 percent increase. (How many of Tyson’s 113,000 employees are not at a living wage?)
- The company’s spending for buying back stock went up from $295 million in 2014 to $495 million in 2015. When the company buys back its stock, it essentially reduces the number of stockholders it must pay in the future, leaving fewer stockholders to split up the spoils. Many companies today are obliged to buy back shares to increase value for the remaining stockholders.
- Company CEO Donnie Smith explains that Tyson had $322 million in synergies for 2015, expects $500 million in synergies in 2016 and a whopping $700 million in synergies in 2017. (Synergy is a term used to describe reductions in employees, wage costs and significant closing of overlapping operations and employees. (As an employee, how would you see your future with a company seeking to eliminate $1.5 billion in overlaps stemming from the Tyson merger with Hillshire Farms in late 2014.
- For 2015, stockholders received the following financial benefits: 1) $147 million in dividends. 2) $495 million in increased stock value due to buyback of Tyson stock – Tyson stock prices are up almost 60 percent over the last 12 months. 3) $322 million from synergies (reduction in costs). (In 2015, Tyson spent and saved $964 million (almost $1 billion) for the benefit of stockholders and employees got notice of dramatic cuts moving forward.)
While food corporations are praised for delivering returns to capital (stockholders), millions of food-chain employees suffer from want of the basics due to below-the-cost-of-living wages. The earning power of capital as opposed to the earning power of work creates an imbalance of purchasing power between American economic classes. Again, this is not a criticism of Tyson, but a look at how politics, the public and law enforcement simply cannot contain the excesses from a world competing for a limited supply of circulating dollars. Large sectors of people and the environment are externalized in the process.
Every year, publically traded companies file reports with the Securities and Exchange Commission. Part of those disclosures include reporting compensation of the top executive officers. For 2015, Tyson’s top five (5) executive officers received combined compensation totaling $42, 210,728. This sum would employ 2,757 full-time minimum wage workers. For fiscal year 2015, Tysons sales were $41.4 billion, providing investors with a return on invested capital of 13.4%
The biggest challenge business and industry faces is the lack of purchasing power of the customers they wish to sell to. Yet, financial realities that business and industry face, exerts tremendous power to externalize the cost of employees and planetary stewardship. It will take more than a genius to figure out how to create a world of win/win for all parties who are stakeholders.
Following is a short video on the class action lawsuit between 3,000 Tyson Foods Employees against Tyson Foods for uncompensated time at work. The video is dated just a few months before a final ruling was made in favor of the employees: