• 04/20/2020
  • Corona-Krise

"Dividends and short-time work? How does that fit together? The only sacrificial variable in a crisis is profit."

CEO Ernst Prost criticizes "uncontrolled capitalism" and supports social market economy.

Good day, ladies and gentlemen,
dear colleagues!

Last week I wrote to the press and just now there was a short report in the ARD Mittagsmagazin : In some shady corner of the economy profits are distributed by paying out dividends and at the same time "government help" is taken! Not nice at all and rather obscene, cheeky and indecent in any case. There the greedy side of an uncontrolled capitalism becomes visible. You can't cash in short-time work money or demand other state aid with your left hand and at the same time distribute millions and billions of Euros to investors with your right hand. Responsible corporate leaders now hold their money together and do not distribute it to shareholders, institutional asset managers and major stakeholders worth billions. Times have dramatically worsened since the last balance sheet date of 31.12. Cash is king so better leave profits in the company as anything else is foolish. It's impudent and against every commercial rule to distribute last year's profits while at the same time collecting government aid. In France this is forbidden by law, whoever wants state aid, i.e. taxpayers' money is prohibited from paying dividends. Those who request government aid can only do so if they waive dividend payments. The bosses of financial institutions are paying attention to this... how could it be any other way. 
Government provided short-time compensation is a wonderful instrument to prevent unemployment in the workforce, but it must not be abused to reduce costs in order to secure profits. Short-time compensation benefits are taxpayers money!

Thank God we are a family-run mid sized company (the so-called backbone of the German economy) and much more committed to people than to capital. It is about responsibility for the people, for jobs, for society and the country and not about shameless profit maximization! As I already decided in the last crisis, 12 years ago: "We will neither save on our people nor on our concepts or future, the only sacrificial variable in a crisis is profit." If I were to say something like that at a shareholders' meeting, I would probably be thrown off the stage very quickly and my job would be gone too. I've always found it disgusting and perverse that stock prices go up when the board announces layoffs. No wonder that many people flip the bird to this type of economic behavior, especially those who now lost their jobs through no fault of their own and have to rely on government aid (Hartz IV). In order to receive a single dime of government aid you have to lay bare everything about you and your situation and have used up all your savings for a rainy day. Two-handed profit/dividend distribution and collecting support money at the same time is out of the question... It's a valid comparison, both times it's about the taxpayers money.

Everybody who buys stocks wants to make a profit - on the share price and through dividends. There is nothing to be said against that, quite the contrary but whoever wants to take advantage of the entrepreneurial profit opportunities must also bear the entrepreneurial risks. That is why you cannot simply privatize profits in good years and socialize losses in bad years, i.e. push them back into the public domain. Of course, many would want to - that's obvious. Talk is cheap that why it's time for laws and regulations. No bank in the world lends money for the purpose of distributing it to shareholders' as dividends. For once, the state could take an example from the banks.

I am clearly against any form of uncontrolled capitalism as a pure money multiplying machine, and believe in a free social market economy. The emphasis is on free and even more on social. In every crisis it becomes visible who stands where.

And of course neither crooks or cheats have announced short-time work during the crisis, or discovered their decent heart just because a corona virus has appeared. On the contrary, as you can see and read, it is precisely those who enrich themselves unjustly or even criminally that are now particularly active. 

I really do hope that those in our state who are now distributing the money will also ensure that this money goes to the right hands - into the hands of those who need it. I also hope that any form of subsidy fraud or unlawful enrichment will be prosecuted on a massive scale against the backdrop of the aid packages to combat the Corona crisis. After all, it is not Mr Altmaier's or Mr Scholz's money that we are talking about here, it's simply taxpayers' money that we all have to work together to recover. It is our money ... Corporations worth billions of dollars, which would like to distribute profits now, are welcome to do so - but should keep their hands off our money, the taxpayers' money! 
The debts that we are now making to overcome the crisis must be paid back by our children or even their children - if we are not careful! It's the task of all of society and the economy not to grow this mountain of debt unnecessarily bigger than it will become anyway. It is a question of honor where every honest businessman must ask himself whether he wants to reach up to his elbows into the public chest or not. 


Ernst Prost