You libs sure are a hypocritical bunch.....

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  1. #1

    You libs sure are a hypocritical bunch.....

    Jim Sinegal gets up at the DNC preaching about fairness and a shared sacrifice but pulls off this little tax avoidance coup. Nothing legally wrong with what COSTCO did but it reeks of hypocrisy. And wasn't Uncle Joe Biden at a COSTCO this past week?

    From the WSJ

    When President Obama needed a business executive to come to his campaign defense, Jim Sinegal was there. The Costco COSTO co-founder, director and former CEO even made a prime-time speech at the Democratic Party convention in Charlotte. So what a surprise this week to see that Mr. Sinegal and the rest of the Costco board voted to give themselves a special dividend to avoid Mr. Obama's looming tax increase. Is this what the President means by "tax fairness"?

    Specifically, the giant retailer announced Wednesday that the company will pay a special dividend of $7 a share this month. That's a $3 billion Christmas gift for shareholders that will let them be taxed at the current dividend rate of 15%, rather than next year's rate of up to 43.4%—an increase to 39.6% as the Bush-era rates expire plus another 3.8% from the new ObamaCare surcharge.

    More striking is that Costco also announced that it will borrow $3.5 billion to finance the special payout. Dividends are typically paid out of earnings, either current or accumulated. But so eager are the Costco executives to get out ahead of the tax man that they're taking on debt to do so.

    Shareholders were happy as they bid up shares by more than 5% in two days. But the rating agencies were less thrilled, as Fitch downgraded Costco's credit to A+ from AA-. Standard & Poor's had been watching the company for a potential upgrade but pulled the watch on the borrowing news.

    We think companies can do what they want with their cash, but it's certainly rare to see a public corporation weaken its balance sheet not for investment in the future but to make a one-time equity payout. It's a good illustration of the way that Federal Reserve Chairman Ben Bernanke's near-zero interest rates are combining with federal tax policy to distort business decisions.

    One of the biggest dividend winners will be none other than Mr. Sinegal, who owns about two million shares, while his wife owns another 84,669. At $7 a share, the former CEO will take home roughly $14 million. At a 15% tax rate he'll get to keep nearly $12 million of that windfall, while at next year's rate of 43.4% he'd take home only about $8 million. That's a lot of extra cannoli.

    This isn't exactly the tone of, er, shared sacrifice that Mr. Sinegal struck on stage in Charlotte. He described Mr. Obama as "a President making an economy built to last," adding that "for companies like Costco to invest, grow, hire and flourish, the conditions have to be right. That requires something from all of us." But apparently $4 million less from

    By the way, the Costco board also includes at least two other prominent tub-thumpers for higher taxes— William Gates Sr. and Charles Munger. Mr. Gates, the father of Microsoft's MSFT Bill Gates, has campaigned against repealing the death tax and led the fight to impose an income tax via referendum in Washington state in 2010. It lost. Mr. Munger is Warren Buffett's longtime Sancho Panza at Berkshire Hathaway and has spoken approvingly of a value-added tax that would stick it to the middle class.

    Costco's chief financial officer, Richard Galanti, confirms that every member of the board is also a shareholder. Based on the most recent publicly available data, they own more than 4.1 million shares and more than 1.3 million options to purchase additional shares. At $7 a share, the dividend will distribute roughly $29 million to the board, including Mr. Sinegal's $14 million—at a collective tax saving of about $8 million. Even more cannoli.

    We emailed Mr. Sinegal for comment but didn't hear back. Mr. Galanti explained that while looming tax hikes are a factor in the December borrowing and payout, so are current low interest rates. Mr. Galanti adds that the company will still have a strong balance sheet and is increasing its capital expenditures and store openings this year.

    As it happens, one of those new stores opened Thursday in Washington, D.C., and no less a political star than Joe Biden stopped by to join Mr. Sinegal and pose for photos as he did some Christmas shopping. It's nice to have friends in high places. We don't know if Mr. Biden is a Costco shareholder, but if he wants to get in on the special dividend there's still time before his confiscatory tax policy hits. The dividend is payable on December 18 to holders of record on December 10.

    To sum up: Here we have people at the very top of the top 1% who preach about tax fairness voting to write themselves a huge dividend check to avoid the Obama tax increase they claim it is a public service to impose on middle-class Americans who work for 30 years and finally make $250,000 for a brief window in time.

  2. #2
    Tug Medick's Avatar
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    His fiduciary duty to shareholders trumps his personal political leanings. The BOD is doing the right thing.
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  3. #3
    Originally Posted by Tug Medick View Post
    His fiduciary duty to shareholders trumps his personal political leanings. The BOD is doing the right thing.
    Finally, a voice of reason on this board.

  4. #4
    COSTCO has been critized for many years of putting members ahead of shareholders and to think this is a move solely for the shareholders is a bit of a reach.

    I am a shareholder and will get a nice little benefit from this so I am not outraged but found it interesting none the less. But i dont stand to save $4MM in taxes.....i wish i bad that problem. They are not the only company doing it either but the fact Sinegal spoke at the DNC made it all the more interesting.

  5. #5
    Originally Posted by Tug Medick View Post
    His fiduciary duty to shareholders trumps his personal political leanings. The BOD is doing the right thing.
    But is taking on unneeded debt truly putting the shareholders first ?

  6. #6
    Originally Posted by brokebacksooner View Post
    But is taking on unneeded debt truly putting the shareholders first ?
    Their stock price rose as a result of the announcement of the special dividend and the borrowing rate was extremely low. Furthermore, they took into account the impact on their shareholders' 2012 tax liabilities. Many other companies are borrowing when they otherwise don't have to because of how low of an interest rate that they'll pay. See, e.g., Microsoft.

  7. #7
    Nothing to see here...move on...

  8. #8
    Originally Posted by Sinatra View Post
    Their stock price rose as a result of the announcement of the special dividend and the borrowing rate was extremely low. Furthermore, they took into account the impact on their shareholders' 2012 tax liabilities. Many other companies are borrowing when they otherwise don't have to because of how low of an interest rate that they'll pay. See, e.g., Microsoft.
    Short term yes; but what about 6 months from now or 2 years from now. Is the fiduciary duty for the here and now or for the long term? Rhetorical question because I know it's for the here and now; but not convinced that is the best way forward.
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  9. #9
    Originally Posted by pphilfran View Post
    Nothing to see here...move on...
    Nobody cares what he does with his company. Where the problem crops up is when he says do this tax wise, but then prior to the tax thing, he does something that makes it appear he's not as behind it as he wants us to believe. Do as I say.

  10. #10
    Originally Posted by oucub23 View Post
    Nobody cares what he does with his company. Where the problem crops up is when he says do this tax wise, but then prior to the tax thing, he does something that makes it appear he's not as behind it as he wants us to believe. Do as I say.
    It's not just "his company." It's also owned by thousands of others. We've been through this before. It seems apparent that you either know nothing about the legal standard to which an officer and director of a company is held or just want to gripe about some guy whose political beliefs you disagree with.

  11. #11
    Originally Posted by Sinatra View Post
    It's not just "his company." It's also owned by thousands of others. We've been through this before. It seems apparent that you either know nothing about the legal standard to which an officer and director of a company is held or just want to gripe about some guy whose political beliefs you disagree with.
    He's put out there as an example of leadership for the tax raising thing. 'Look at this CEO and how he runs his company. We should all try to be like this. This is what America needs now--people like this. Companies like this. Others should follow his lead.' Now we find stuff like this. You accuse me of griping about someone that I disagree with politically--I don't care what he does. It's his company. If he wants to sell it and move to Fiji, give it away to the local church or mosque or run it into the ground, it isn't my business. It's his. I just don't have any interest in being lectured to by someone whose company is doing this stuff. He, and Buffet for that matter, doesn't have the pulpit he has if he's not the CEO of this company (or in Buffet's case, the .001%.) It seems that you like to excuse people that do things like this if he has political beliefs that you do agree with.

  12. #12
    Tug Medick's Avatar
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    Originally Posted by 2121sooner View Post
    COSTCO has been critized for many years of putting members ahead of shareholders and to think this is a move solely for the shareholders is a bit of a reach.

    I am a shareholder and will get a nice little benefit from this so I am not outraged but found it interesting none the less. But i dont stand to save $4MM in taxes.....i wish i bad that problem. They are not the only company doing it either but the fact Sinegal spoke at the DNC made it all the more interesting.
    The sole reason for Costco's existence is to serve its members (customers). Same as any other company. If they ever lose their fanatacism about that, the customers will walk and the shareholders will own a much less attractive asset.

    If a dividend is not solely for the shareholders, then who?

  13. #13
    Tug Medick's Avatar
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    Originally Posted by 2121sooner View Post
    COSTCO has been critized for many years of putting members ahead of shareholders and to think this is a move solely for the shareholders is a bit of a reach.

    I am a shareholder and will get a nice little benefit from this so I am not outraged but found it interesting none the less. But i dont stand to save $4MM in taxes.....i wish i bad that problem. They are not the only company doing it either but the fact Sinegal spoke at the DNC made it all the more interesting.
    The sole reason for Costco's existence is to serve its members (customers). Same as any other company. If they ever lose their fanatacism about that, the customers will walk and the shareholders will own a much less attractive asset.

    If a dividend is not solely for the shareholders, then who?

  14. #14
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    Originally Posted by brokebacksooner View Post
    But is taking on unneeded debt truly putting the shareholders first ?
    Yes, IMO. Accessing the capital markets on extremely favorable terms is a wise move.

  15. #15
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    You libs sure are a hypocritical bunch.....

    I thought this was going to be about the dem rep that wants to change the constitution to limit free speech.

  16. #16
    Originally Posted by oucub23 View Post
    He's put out there as an example of leadership for the tax raising thing. 'Look at this CEO and how he runs his company. We should all try to be like this. This is what America needs now--people like this. Companies like this. Others should follow his lead.' Now we find stuff like this. You accuse me of griping about someone that I disagree with politically--I don't care what he does. It's his company. If he wants to sell it and move to Fiji, give it away to the local church or mosque or run it into the ground, it isn't my business. It's his. I just don't have any interest in being lectured to by someone whose company is doing this stuff. He, and Buffet for that matter, doesn't have the pulpit he has if he's not the CEO of this company (or in Buffet's case, the .001%.) It seems that you like to excuse people that do things like this if he has political beliefs that you do agree with.
    Yet another post without any reference to an officer and director's fiduciary duty of loyalty to the shareholders mentioned. It appears that you're not even remotely familiar with corporate law. Is that the case?

    Also, Costco's market cap is about $45 billion. Does the CEO own all of the company's shares?

  17. #17
    Originally Posted by Sinatra View Post
    Yet another post without any reference to an officer and director's fiduciary duty of loyalty to the shareholders mentioned. It appears that you're not even remotely familiar with corporate law. Is that the case?

    Also, Costco's market cap is about $45 billion. Does the CEO own all of the company's shares?
    Are you intentionally being obtuse, or do you really not understand what I'm saying? In my prior experience discussing things with you, I'm assuming it's intentional.

  18. #18
    Originally Posted by oucub23 View Post
    Are you intentionally being obtuse, or do you really not understand what I'm saying? In my prior experience discussing things with you, I'm assuming it's intentional.
    CEO has a certain set of political views and, yet, as CEO and board member of Costco he has to act in the best interests of the company's shareholders. Not too complicated, or much of an issue at all, to me. Seems that you refuse to acknowledge that the guy has to act in the best interests of the shareholders.

  19. #19
    Originally Posted by 2121sooner View Post
    Jim Sinegal gets up at the DNC preaching about fairness and a shared sacrifice but pulls off this little tax avoidance coup. Nothing legally wrong with what COSTCO did but it reeks of hypocrisy. And wasn't Uncle Joe Biden at a COSTCO this past week?

    From the WSJ

    When President Obama needed a business executive to come to his campaign defense, Jim Sinegal was there. The Costco COSTO co-founder, director and former CEO even made a prime-time speech at the Democratic Party convention in Charlotte. So what a surprise this week to see that Mr. Sinegal and the rest of the Costco board voted to give themselves a special dividend to avoid Mr. Obama's looming tax increase. Is this what the President means by "tax fairness"?

    Specifically, the giant retailer announced Wednesday that the company will pay a special dividend of $7 a share this month. That's a $3 billion Christmas gift for shareholders that will let them be taxed at the current dividend rate of 15%, rather than next year's rate of up to 43.4%—an increase to 39.6% as the Bush-era rates expire plus another 3.8% from the new ObamaCare surcharge.

    More striking is that Costco also announced that it will borrow $3.5 billion to finance the special payout. Dividends are typically paid out of earnings, either current or accumulated. But so eager are the Costco executives to get out ahead of the tax man that they're taking on debt to do so.

    Shareholders were happy as they bid up shares by more than 5% in two days. But the rating agencies were less thrilled, as Fitch downgraded Costco's credit to A+ from AA-. Standard & Poor's had been watching the company for a potential upgrade but pulled the watch on the borrowing news.

    We think companies can do what they want with their cash, but it's certainly rare to see a public corporation weaken its balance sheet not for investment in the future but to make a one-time equity payout. It's a good illustration of the way that Federal Reserve Chairman Ben Bernanke's near-zero interest rates are combining with federal tax policy to distort business decisions.

    One of the biggest dividend winners will be none other than Mr. Sinegal, who owns about two million shares, while his wife owns another 84,669. At $7 a share, the former CEO will take home roughly $14 million. At a 15% tax rate he'll get to keep nearly $12 million of that windfall, while at next year's rate of 43.4% he'd take home only about $8 million. That's a lot of extra cannoli.

    This isn't exactly the tone of, er, shared sacrifice that Mr. Sinegal struck on stage in Charlotte. He described Mr. Obama as "a President making an economy built to last," adding that "for companies like Costco to invest, grow, hire and flourish, the conditions have to be right. That requires something from all of us." But apparently $4 million less from

    By the way, the Costco board also includes at least two other prominent tub-thumpers for higher taxes— William Gates Sr. and Charles Munger. Mr. Gates, the father of Microsoft's MSFT Bill Gates, has campaigned against repealing the death tax and led the fight to impose an income tax via referendum in Washington state in 2010. It lost. Mr. Munger is Warren Buffett's longtime Sancho Panza at Berkshire Hathaway and has spoken approvingly of a value-added tax that would stick it to the middle class.

    Costco's chief financial officer, Richard Galanti, confirms that every member of the board is also a shareholder. Based on the most recent publicly available data, they own more than 4.1 million shares and more than 1.3 million options to purchase additional shares. At $7 a share, the dividend will distribute roughly $29 million to the board, including Mr. Sinegal's $14 million—at a collective tax saving of about $8 million. Even more cannoli.

    We emailed Mr. Sinegal for comment but didn't hear back. Mr. Galanti explained that while looming tax hikes are a factor in the December borrowing and payout, so are current low interest rates. Mr. Galanti adds that the company will still have a strong balance sheet and is increasing its capital expenditures and store openings this year.

    As it happens, one of those new stores opened Thursday in Washington, D.C., and no less a political star than Joe Biden stopped by to join Mr. Sinegal and pose for photos as he did some Christmas shopping. It's nice to have friends in high places. We don't know if Mr. Biden is a Costco shareholder, but if he wants to get in on the special dividend there's still time before his confiscatory tax policy hits. The dividend is payable on December 18 to holders of record on December 10.

    To sum up: Here we have people at the very top of the top 1% who preach about tax fairness voting to write themselves a huge dividend check to avoid the Obama tax increase they claim it is a public service to impose on middle-class Americans who work for 30 years and finally make $250,000 for a brief window in time.
    Four more years ! It's a **** ain't it ? LOL

  20. #20

    You libs sure are a hypocritical bunch.....

    Originally Posted by Sinatra View Post
    CEO has a certain set of political views and, yet, as CEO and board member of Costco he has to act in the best interests of the company's shareholders. Not too complicated, or much of an issue at all, to me. Seems that you refuse to acknowledge that the guy has to act in the best interests of the shareholders.
    That's not what I'm talking about. I'm talking about him being trumpeted as a guy that's doing it the way O and Co want it done--when he's really not. It's the same nonsense we saw with Imelt being a jobs czar lamenting outsourcing while GE was outsourcing to China. Imelt was doing what's best for GE. He shouldn't be a jobs guy though. Stop sending people out to lecture he American public that are do as I say people. If this tax thing is so good for business, quit dodging it. If the ACA is so good for America, quit exempting people from it--especially Congress. Have some integrity.
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  21. #21

    You libs sure are a hypocritical bunch.....

    Originally Posted by boomermagic View Post
    Four more years ! It's a **** ain't it ? LOL
    The CEO got a four year contract extension?

  22. #22
    Originally Posted by oucub23 View Post
    The CEO got a four year contract extension?
    If Obama was a CEO we would have given him a $20 million severance package and sent that ignorant ****er on his way.

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