Emmanuel Macron announced on Wednesday March 22, 2023 that he was going to ask the government to work on a system establishing a “outstanding contribution“from companies to their employees when they make significant profits.
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“We have big companies, which make income so exceptional that they end up using this money to buy back their own shares. There, I am going to ask the government to be able to work on an exceptional contribution so that this money (…), their workers can benefit from it and that there is a fair distribution“, declared the head of state during a television interview on TF1 and France 2. “We want companies that buy back shares to contribute to the best compensation for employees“, then specified, in the Senate, the Minister of the Economy Bruno Le Maire.
So what to expect?
Concretely, it would be, for cthis contribution, to push companies that are making record profits to pay a larger share to their employees, to go much further than the existing profit-sharing and profit-sharing systems. Attention: nothing to do with a tax on superprofits, even if Emmanuel Macron targets these large groups which generated billions of euros in profits last year, namely more than 142 billion cumulated for the tricolor groups of the CAC 40.
This contribution will not concern many companies, because it will only concern those with more than 5,000 employees and only those which buy back shares. They would then have to double the sums paid to their employees in respect of participation, and profit-sharing, just to rebalance with the amounts paid in dividends to shareholders.
In fact, listed companies, which make significant profits, and which therefore have cash available, can buy back their own securities. This makes it possible to reduce the number of shares in circulation on the market or on the stock exchange, which mechanically increases both the demand for and the price of these shares. It is therefore a way of favoring your shareholders a little more. It is a very widespread practice in the United States, but which is well established in France. Most of the major groups used it last year: LVMH thus spent up to 1.5 billion euros on share buybacks and thus paid six billion euros in dividends to shareholders; five billion in share buybacks, for BNP, or half of its profit this quarter; TotalEnergies plans to shell out almost two billion for its takeovers, etc.
This contribution will not come into force immediately, because the president leaves it to the social partners to negotiate the terms. Employers will put the brakes on. It also means defining what an exceptional profit is, enough to fuel important debates.