Oracle suffers premature remuneration: Spaffs $900m on shareholders
Year's worth of dividends dished out early to avoid tax hike
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Oracle is paying shareholders $867m in quarterly dividends early to beat a possible 2013 US tax hike.
The company declared on Monday an accelerated second, third and fourth quarter cash dividend of $0.18 per share of outstanding common stock.
The bonanza will be paid on 21 December 2012 instead of quarterly in 2013.
Oracle’s single largest shareholder is chief executive Larry Ellison, but Oracle said in a statement its alpha-male boss had not participated in discussions or the board vote on the matter.
At midnight on 31 December the US has its appointment with a fiscal cliff: that’s when tax cuts passed under former president George W Bush will expire, and agreed government spending cuts kick in. Negotiations over exactly what will change are still ongoing in Washington.
When the Bush-era tax cuts end, levies on dividends could jump, depending on one's income, from the six tax categories of 10, 15, 25, 28, 33 and 35 per cent to five categories of 15, 28, 31, 36 and 39.6.
Oracle is the latest US listed company to shunt forward dividend payments to avoid a tax hike for shareholders. Retail giant Wal-Mart is among those dumping barrel loads of cash on investors by paying out quarterly 2013 dividends early. ®
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COMMENTS
"Discussions"?
"....Oracle’s single largest shareholder is chief executive Larry Ellison, but Oracle said in a statement its alpha-male boss had not participated in discussions or the board vote on the matter....." That's because there was no discussion - when Emperor Larry says jump the board don't even bother to ask how high! After all, MiG fuel and yatchs are expensive.
Dividend (usually) != ordinary income
"When the Bush-era tax cuts end, levies on dividends could jump, depending on one's income, from the six tax categories of 10, 15, 25, 28, 33 and 35 per cent to five categories of 15, 28, 31, 36 and 39.6."
Not quite. While the post-cliff rates are correct, today 'qualified' dividends are taxed at the 0% or 15% rate, not the ordinary income rates as shown in the article. Thus Larry goes from 15%->39.6%, NOT just 35%->39.6%.
What will be interesting...
Is how much Oracle's stock will fall after the 21st, when owners and buyers have to look forward to 3 quarters without a dividend.
Where's that damn $ icon I have been asking for?
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