When the boss says there’s no money for a raise and plants must close, ask about the new share buybacks!

March 13, 2013
Mondelez International Authorizes Share Repurchases

DEERFIELD, Ill., March 13, 2013 /PRNewswire/ — Mondelez International, Inc. announced today that its Board of Directors has authorized the repurchase of up to the lesser of 40 million shares or $1.2 billion of Mondelez International’s Class A Common Stock.  The primary purpose of the program will be to offset dilution from the company’s equity compensation plans.

The shares will be repurchased from time to time in one or more open market transactions, privately negotiated transactions or a combination of the foregoing, at the discretion of Mondelez International.  Repurchases will be subject to market conditions and other factors.

The authorization to repurchase shares will end in three years, unless it is terminated or extended by the Board of Directors.

SOURCE Mondelez International, Inc.
http://ir.mondelezinternational.com/releasedetail.cfm?ReleaseID=747959

Mondelez was brought into the world in October 2012 with total long term debt of USD 22.09 billion with total equity of USD 25.29 billion – a debt-to-equity ratio of 87.3%. Since this was announced – only at the end of the first week of trading in shares of the new company – there has been no update on the Mondelez capital structure, but there has been a cascade of closures and outsourcing.

Less than 3 months later, CEO Irene Rosenfeld was paid a USD 10 million ‘special equity award’ of stock in the new company for her “numerous transformational initiatives”.

Taken at face value, the latest company press release says this:

Company money of up to USD 1.2 billion will be spent on buying back Mondelez shares over the next 3 years. We need to buy back the stock because we are issuing stock as part of executive compensation like the recent USD 10 million special award to the CEO. More shares mean less value per share. To reduce the number of shares available on the market we have to spend this sum to buy back available shares. This is the purpose of the buyback program, which could last up to 3 years, at which point we may renew it (or expand it).

The 10 million is only a start – we will continue to pay bonuses in the form of stock and buy back an equivalent amount. This could total over one billion dollars…

So at the next meeting with the company, when the boss explains that there is no money for a raise, or the plant is closing, or production is being transferred or subcontracted, or agency workers are being brought in, remember the buyback program – and ask about it.