Mark Cuban: Government Bailed Out Companies Should ‘NOT’ Be Allowed to Buy Back Stocks

“I know this is early but wanted to get ahead of the politics. If we are going to bailout companies we need to make sure all employees benefit from a turnaround, not just execs.”

• Mark Cuban (twitter: @mcuban)   

American businessman and billionaire, Mark Cuban told CNBC on Wednesday that any company that receives federal assistance due to the coronavirus crisis shouldn’t be allowed to buy back their stocks ever again, “not now. Not a year from now. Not 20 years from now. Not ever.” He further added, “whatever we do in a bailout, make sure that every worker is compensated and treated equally.” However, if there’d be any case of executive compensations such as repricing existing stock options or equity then the benefits should be opened to all employees of bailed out companies rather than the executives alone. He pushes against the inequality between executives and workers.

It is expected that in the threat of an economic decline or recession, the government steps in to bailout companies that are considered “too big to fail,” as any slight drop in the performance of such companies would greatly affect the US economy. In recent times, government bailouts are not limited to large companies alone, but they also cover vital small and medium enterprises that contribute partly to the overall economic performance. With threats of the coronavirus pandemic at hand, quite a number of companies are in need of federal assistance.

It has since become a tradition to compensate executives of bailed out companies after economic threats are mitigated. Businessmen like Mark Cuban believe that it is seemingly unfair that only executives partake of such benefits.

His reasons for saying that is completely political as the so-called “government money” is actually tax payer’s money. “Because effectively you’re spending taxpayer money to buyback stock and to me that’s just the wrong way to do that.”

He doesn’t dispute the fact that a bailout may be quite necessary to keep the economy rolling amid the coronavirus crisis threats, however, he strongly suggests “whatever we do in a bailout, make sure that every worker is compensated and treated equally—in that the executives don’t get rewarded extra to stick around because they got nowhere else to go.” Prior to this, he tweeted on Tuesday the need for equality between executives and workers of bailout companies in that “all employees benefit from a turnaround, not just execs. This would be a step toward income equality.”

Jim Cramer, Mad Money host approved of Cuban’s take as he wrote in a retweet of Cuban’s tweet, “It is very rare that I read something that I totally and unequivocally agree with. Below is one of those reads.” He further wrote, “I am so tired of the rich profiting from every cataclysm. This is the time to reset the system in favor of the working person. Right Now!”

In response to Jim Cramer, Cuban tweeted, “Whenever we get through this, we will look back and wonder why we didn’t use this as an opportunity to attack income inequality. Let’s not make that mistake. This is our chance to do the right thing and reward EVERYONE who contributes to the turnaround in the economy.”