Legislation aimed at curbing corporate stock buybacks and diverting some of the money to workers was introduced Wednesday by Sen. Sherrod Brown, D-Ohio.
Mr. Brown said at a press briefing that record amounts of stock buybacks following 2017 tax cuts are benefiting executives at the sake of workers. His proposal, the Stock Buyback Reform and Worker Dividend Act, would ensure that for each $1 million of stock buybacks, dividend increases and special dividends, one dollar would go to a company's employees.
The legislation would also "tighten up the rules" around stock buybacks, Mr. Brown said at the briefing. It calls on the Securities and Exchange Commission to set a permissible amount of stock buybacks a company can make, impose reporting requirements to ensure transparency about stock buybacks and a mandatory prohibition on excessive stock buyback activities. Companies failing to follow the worker dividend rules would have a five-year moratorium on stock buybacks and a private right of action for employees, such as litigation.
Mr. Brown's website offers a calculator for workers to figure out how much they could receive if the proposal was enacted.
"My message is not anti-corporation; it is pro-worker," said Mr. Brown, who did not identify potential sponsors or next steps for the proposal. When asked if it could have a chilling effect on companies considering going public, Mr. Brown said, "I cannot imagine this would be a major concern. I think it will change corporate behavior."
Tom Quaadman, executive vice president of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, said in a statement that the bill "is similar to failed policies of the past that have cut off hope, opportunity and innovation for American workers and Main Street business owners. We are happy to work with policymakers from both parties to develop policies that promote growth and opportunity throughout the American economy."