Dive Brief:
- Houston-based Waste Management announced Wednesday that it would be giving its North American employees a $2,000 bonus because of the new U.S. corporate tax structure. Waste Management is benefiting from the U.S. corporate tax rate dropping from 35% to 21%.
- The bonus will go to the estimated 34,000 hourly and salaried full-time employees who do not participate in a sales incentive or bonus plan. Details were not disclosed about when the bonus would be distributed.
- CEO Jim Fish said the bonus is a way for the company to "show our appreciation to so many of our valued employees while growing our business and returning a good portion of the tax savings directly to the overall economy."
Dive Insight:
If the company pays out the bonus to all eligible employees, it will run about $68 million. That would be, however, just a small fraction of the company's 2017 Q3 earnings.Waste Management has not said whether the new tax code will lead to higher wages or new hiring. Though Fish expressed support for a federal restructuring on multiple occasions in 2017, including a Sept. interview with Waste Dive.
During the company's latest earnings call, executives talked up plans to offer more competitive wages to combat turnover for truck drivers, as well as ongoing plans for more capital spending and acquisitions. While the company hasn't made any announcements about major investments or mergers yet, it is a plausible scenario given the dramatic corporate tax cut. These topics can be expected to come up during Waste Management's Q4 earnings call in February.
None of the industry's other large publicly traded companies - Republic Services, Waste Connections or Advanced Disposal - have made announcements about employee bonuses yet. During the company's latest earnings call, Waste Connections CEO Ron Mittelstaedt was optimistic about a tax overhaul, and predicted it would bring a significant increase in M&A activity. This has already been on display with recent deal announcements from regional companies of varying sizes including Casella Waste Systems, Meridian Waste Solutions and Action Environmental Services.
It is possible that as the new tax code kicks in, and earnings calls approach, more companies will also make announcements about returning some of their profit to employees.
