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Companies' Key to Higher Stock Price: Get Rid of Workers

By    |   Wednesday, 07 May 2014 09:33 PM

Companies seem to have found a sure-fire way to lift their stock prices: jettison their employees.

A total of 14 companies in the S&P 500 have erased jobs in each of their past five fiscal years.

And those companies' shares have outperformed the index, USA Today reports.

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The stocks increased 18.8 on average over the past year, besting the 15.5 percent rise for the S&P 500, according to the paper and S&P Capital IQ. Over the past five years, the job cutters lead the index 269 percent to 103 percent.

To be sure, not all the job losses stem from layoffs, USA Today notes. Some come from restructurings and divestitures.

In any case, leading the 14 companies in reducing headcount over the last five years is telecommunications equipment maker Motorola Solutions. Its workforce dropped 67 percent during the period, and its stock gained 50 percent.

Macerich, a real estate investment trust, placed second in payroll reduction at 65 percent over the past five years. Its stock soared 248 percent.

The companies that led the way in one-year gains for their stock prices are office-equipment maker Pitney Bowes, at 73 percent, and defense contractor Lockheed Martin, at 60 percent.

Interestingly enough, while some companies are dumping workers, others are increasing their employees' compensation.

Executives at about 25 big companies said in discussions of their first-quarter earnings that pay is rising across much of their operations, The Wall Street Journal reports. The companies include money manager State Street, coatings manufacturer PPG Industries and restaurant company Chipotle Mexican Grill.

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Companies seem to have found a sure-fire way to lift their stock prices: jettison their employees.
Stocks, companies, shed, workers
Wednesday, 07 May 2014 09:33 PM
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