Touch the Soil News #447 (Feature Photo: Orin Hargraves – CC 2.0)
What we are about to discover here, has more impact on the food chain and who is able to afford food than virtually any other power. It supersedes the power of the executive officers of the corporations who run the 7 top chemical/GMO companies in the world (see News#446). It can rival the power of the Federal Government and Federal Regulators.
The pending merger between the Dow Chemical Company and the DuPont Company provides perspective. In reviewing the merger, the message is not one of criticism of Dow or DuPont. As we will explore, these two companies are merely surface expressions of the backroom demands of huge concentrations of investment dollars – stockholders.
The majority of the stocks – of virtually all large publically traded companies – are controlled by institutional investors. Institutional investors control 69.77 percent of the Dow Chemical Company. Institutional investors control 70.60 percent of Dupont.
An institutional investor can be a large asset management company like BlackRock, Inc. – a company that has 12,000 employees and manages $4.6 trillion dollars of other people’s money. Another example would be pension funds – like the TIAA, which serves 3.9 million active and retired teachers and employees of medical establishments. The TIAA has 12,500 employees and manages $866 billion in retiree funds.
The top 15 institutional investors of Dow Chemical control 31 percent of the company stock. The top 15 institutional investors of DuPont control 40 percent of the company stock. To a large extent, the largest institutional investors of Dow are the same as the largest institutional investors of DuPont (see Info Graphic #1).
Ten of the largest investors in Dow and Dupont are one and the same. Vanguard Group, for example, holds 71.8 million shares of Dow and 54.4 million shares of DuPont.
The Dow / Dupont merger is about stockholders who know each other and are often one and the same. They are directing the management of each company to explore how many people they can let go and if any duplicate operations can be eliminated so that in the end the same stockholders make more money.
As a side note, the California State Teachers Retirement system – one of the smaller institutional investors, holds 2.4 million shares of Dow and 1.9 million shares of DuPont. Following is a short synopsis of each company:
In business for 119 years
2015 sales of $48.8 billion (down $9.4 billion from 2014)
In 2015, the top 5 executives received total compensation of $52 million
Paid out $4.6 billion to shareholders in 2015 (dividends and stock buybacks)
In business for 214 years
2015 Sales of $25.1 billion (down $3.3 billion from 2014)
In 2015, the top 5 executives received total compensation of $41 million.
Paid out $3.9 billion to shareholders in 2015 (dividends and stock buybacks)
For clarification, when a company buys back its own stock from other stockholders, it has the effect of reducing the number of stockholders who split up the company profits. Preliminary estimates from analysts suggest that the combined Dow/DuPont company would sell almost 1/5 of the world’s pesticides and about 40 percent of the nation’s corn and soybean seeds (GMOs).
The important questions facing Americans are: 1) To what extent are their investments and pensions working to eliminate their jobs and the jobs of their children and grandchildren? 2) To what extent are their investments and pensions determining the toxicity and lack of diversity in the food they eat?
Following is a short video clip on the proposed Dow/DuPont merger: