Is shareholder compensation excessive?

2023-06-03 07:00:00

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CHRONIC. Several criteria make it possible to judge whether the remuneration of shareholders is excessive or not. With glaring inequalities, especially in the United States.

By Patrick Artus*

Shareholder remuneration is much higher in the United States than in the Euro zone. (Illustrative photo).
© ANGELA WEISS / AFP

Published on 06/03/2023 at 09:00

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IIt is often argued that shareholder remuneration is excessively high, and is obtained at the expense of investment and salary growth. To examine this idea, focus on the United States and the euro zone.

As a reminder, shareholder compensation includes dividends and share buybacks. To judge the “excessive” nature, several questions must be analysed: is the return linked to the holding of shares abnormally high compared to the return on financial assets? Is shareholder remuneration at the expense of wages or corporate investment? Is the remuneration of shareholders very high due to abnormally high profitability of companies because resulting from the insufficiency…

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