This number must be melted on the tongue: Between 2008 and 2017, the 500 largest US corporations spent four trillion dollars on share buybacks – more than half of their profits. This makes it clear that one-sided shareholder value thinking still dominates overseas – the motto is “shareholders are fuelling instead of investing in the future”. In our opinion, the volume of share buybacks in Germany is also too high, but significantly lower. This is also due to the fact that decision-makers are committed to the well-being of the company and not to individual stakeholders (see also the VARD Professional Principles).
Is America betting on European governance?
We have therefore noted with interest that in the USA the group of those who want to emulate us and make US governance more European is growing. The leader of the Democratic parliamentary group in the Senate, Charles Schumer, and the independent Senator Bernie Sanders have announced a legislative initiative to limit share buybacks. Presidential candidate Elizabeth Warren had already presented the “Accountable Capitalism Act” in 2018, which provides for the abolition of the shareholder value principle and the introduction of co-determination. Certainly: one does not have to agree with all the proposals of Sanders, Warren & Co. (especially in tax policy). But some of what is dismissed in the USA as a left-wing spinning mill is what we call a social market economy.