When States and the US government recommended shut down of companies because of the coronavirus pandemic, many companies did and have and that is good for public health. One of the issues of companies is do they proceed with stock buybacks and pay dividends as they laid off workers. Some of the biggest companies in the tourism business – Royal Caribbean Cruises Ltd, Haliburton Co, General Motors and McDonald’s Corp all have laid staff, cut their hours or slashed salaries while maintaining their policies despite the economic pain.

In an article Ross Kerber, Alwyn Scott, Jessica Dinapoli, and Rebecca Spalding of Reuters noted Royal Caribbean which has halted its cruises in response has borrowed to boost its liquidity to more than $3.6 billion said it began laying off contract workers in mid March, although the moves did not affect its full time employees. The company has not suspended its remaining $600 million share buyback program or its dividend which totaled $602 million last year and is set quarterly.

Royal Caribbean noted we continue to take decisive actions to protect financial and liquidity positions. Royal Caribbean’s rival Carnival Corp has laid off contract workers, it has suspended dividends and buybacks and raised more than $6 billion in capital markets. (a Saudi investment company has bought 8% of the stock).

Goldman Sachs analysts forecast that S&P 500 companies would cut dividends in 2020 by an average of 50% because of the fallout from the coronavirus pandemic.

If a company receives US government under a $2.3 trillion stimulus package are obliged to suspend share buybacks. Layoffs ending March topped 6.6%. It will go higher in April.

Critics say companies should cut shareholders, before letting workers go.

McDonald’s suspended buybacks, but maintaining its annual dividend of $3.6 billion. McDonald’s said staffing was done by franchise operators but not corporate office. The pr department said it was not making a choice between employees and dividends.

GM has halted normal production (it is a little hard to buy vehicles while stay at home restrictions are in place; GM paid its first quarter dividend on March 20 and has a month to decide to declare paying its next dividend.

Halliburton laid off 3,500 workers in its Houston office. The company cited the virus and lower oil prices as the reason for the layoffs. In March, it paid its 1st quarter dividend to shareholders as planned.

Large asset managers BlackRock and Vanguard have cited managing human capital as a priority for companies they invest in. Yet they have been silent.

Linking to dividend paying stocks, investors are biased for both shareholder buyouts and dividends. While we want companies to ensure they have ample liquidity for a wide variety of scenarios and implement austerity measures to preserve cash or at least say what GM said it was doing. The bias is to pay dividends unless the companies believe the change is going to last a long time.

There are more questions than answers, until the next time – to raising questions.