President Emmanuel Macron on Wednesday denounced the “cynicism” of certain “big companies” which take advantage of record profits to buy back their own shares on the stock market, asking that they pay more to their employees. “There is still a bit of cynicism at work, when you have large companies that make such exceptional income that they end up using this money to buy back their own shares,” said the head of the State on TF1 and France 2. He intends to “ask the government to work on an exceptional contribution” so that “workers can take advantage” of this money.
142 billion euros in profits for CAC 40 companies
In addition to dividends, more and more companies are choosing to buy back their own shares – an operation intended to support the stock market price. French CAC 40 companies generated more than 142 billion euros in cumulative profits in 2022 thanks to luxury and energy records, benefiting from inflation and the energy crisis – auguring a good year for shareholders.
Emmanuel Macron dismissed the solution of taxing superprofits as “we did on energy companies”. “You have to find the right technique”, he explained, so that companies which “are in the process of buying their shares (…) distribute more to their employees”. Already in 2022, CAC 40 companies bought back 23.7 billion euros in shares, according to the financial letter Vernimmen.
For François Rimeu, senior strategist at La Française AM, this may not be enough. “These kinds of measures must be done in a global way, at least European”, he estimated at the microphone of Europe 1. “As long as there are within the European Union tax havens like Luxembourg , the Netherlands and Ireland which allow companies to pay almost 0 tax on what they do in France, I don’t know if that will change anything.”
What will TotalEnergies, BNP Paribas and LVMH do?
TotalEnergies plans to shell out $2 billion in the first quarter of 2023 for share buybacks, as much as the group paid out in a superprofits tax in the EU and the UK. The automotive group Stellantis wants to spend 1.5 billion in share buybacks and pay 4.2 billion euros in dividends, while paying out 2 billion in bonuses for its employees. French banks have also been particularly generous with their shareholders.
BNP Paribas wants to devote 5 billion euros to a share buyback program, the equivalent of half of its record profit of more than 10 billion euros in 2022. Societe Generale has decided to devote the equivalent of 90 % of its net profit to its shareholders via a cash dividend and a share buyback program.
The luxury giant LVMH will distribute 400 million euros to its approximately 39,000 French employees, spend up to 1.5 billion euros in share buybacks and pay out some 6 billion euros in dividends to shareholders, including nearly of 3 billion go to the family of CEO Bernard Arnault. In the United States, President Joe Biden’s 2024 budget notably provides for “a quadrupling of the tax applied to share buybacks”.
The first reading of the text in Parliament is scheduled for this summer.