The executive’s leads for his ‘outstanding contribution’ on corporate superprofits

While the subject of big business profits seemed off, Emmanuel Macron has just reignited it. This Wednesday, during his television interview at the Élysée, the President of the Republic announced his intention to ask the government to work on a “outstanding contribution” on the “windfall business profits“. Denouncing the “cynicismof certain large groups which use theirincome so exceptional” For “buy back their own shares“, the Head of State wishes that these sums “can enjoyto workers.

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Behind this declaration are referred to the share buyback mechanisms. “We want companies that buy back shares to contribute more to better employee compensation“, explained to the Senate, this Wednesday afternoon, Bruno Le Maire. And the Minister of the Economy to specify:We therefore want to force them to distribute more profit-sharing, more participation, more tax-free premiums when they buy back shares. (…) We could envisage for example a doubling of the sums paid under the participation, the profit-sharing or tax-free premiums, for all the large companies which make the repurchase of actions.The companies targeted are those with more than 5,000 employees. This device will be the subject of aproposal to the social partners for them to negotiateon this mechanism, added the tenant of Bercy during current affairs questions to the government.

“We are going to put in place a mechanism to regulate share buybacks for large companies, details for his part Louis Margueritte, deputy of the majority in charge of these subjects. This will go through taxation and/or the requirement of an exceptional contribution in the form of a share of profit-sharing or additional participation for employees.»

“The great project of the majority”

In February, employers and unions reached an agreement on a better sharing of value in business. The text provides in particular for extending participation, now compulsory for companies with more than 50 employees, to companies with 11 to 50 employees, for those who have been beneficiaries consecutively for the last three years. In the event of exceptional results, it still requires companies with more than 50 employees to pay an exceptional contribution to employees. The government is committed to enshrining this agreement in law.

During the campaign, the president had indeed engaged on these issues. In the fall, the Minister of the Economy, Bruno Le Maire, argued along these lines that the sharing of value should be “the major project of the majority“. “When you suddenly have an increase in dividends for your shareholders, then the company must have a mechanism that is identical for employees“, also pointed out the Head of State last October, recalling the importance of sharing the value between shareholders and workers. “VSIt doesn’t work if you give too much to the shareholders and the workers don’t see the color“, he had insisted.

Redemption of shares

Share buyback mechanisms are at the heart of this debate. This operation, intended to support the stock market price, distorts the distribution of value in favor of shareholders. 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. And that same year, CAC 40 companies would have bought back 23.7 billion euros worth of shares, according to the financial letter Vernimmen.

TotalEnergies expects to shell out two billion dollars in the first quarter of 2023 for share buybacks. 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. BNP Paribas wishes 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.