Last edited 12:50 p.m., Jan. 11, 2018
More businesses are providing bonuses or pay increases to their employees following federal approval of sweeping tax reform measures.
Bentonville, Arkansas-based Walmart Stores Inc. (NYSE: WMT) this morning became the latest large corporation to announce plans. Its announcement follows a similar one made last week by Central Bancompany Inc. (OTC: CBCYB) and others this month including Great Southern Bancorp Inc. (Nasdaq: GSBC) and Commerce Bancshares (NYSE: CBSH).
Walmart plans to increase pay for U.S. hourly workers to $11 per hour, expand maternity and paternity leave benefits, create a new benefit assisting with adoption expenses and provide a one-time cash bonus to eligible associates of up to $1,000. According to a news release, the changes will benefit the company’s more than 1 million U.S. hourly workers and provide bonuses to full- and part-time employees based on length of service.
For the current fiscal year that ends Jan. 31, the one-time bonuses represent an investment of roughly $400 million. The higher wages will take effect in February and cost the company about $300 million.
“We are early in the stages of assessing the opportunities tax reform creates for us to invest in our customers and associates and to further strengthen our business, all of which should benefit our shareholders,” Walmart President and CEO Doug McMillon said in the release. “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.”
The new tax rate became effective Jan. 1 for tax years starting in 2018 and beyond, according to Central Trust Co. Tax Officer Kristin Carter. As such, corporations will benefit from the 21 percent rate for the first time only after filing their 2018 taxes. Corporate filings typically are due March 15 each year.
“It’s pretty straight forward,” said Andrew Tasset, Central Trust Co. and Central Bank vice president and marketing manager. “Realistically, we’re seeing some tax relief and tax breaks for the company, and we just wanted to share that with the employees for all their hard work.”
Jefferson City-based Central Bancompany is the $13 billion holding company for Central Bank of the Ozarks, Central Bank of Lake of the Ozarks and Central Bank of Branson. Full-time employees at those branches will get $1,000 bonuses, and part-time employees will get $500. The bonuses will arrive starting the week of Jan. 15, Tasset said.
With more than 2,500 employees across four states, Central Bancompany plans to award nearly $2.4 million overall in employee bonuses.
Springfield-based Great Southern Bancorp Inc. President and CEO Joe Turner also cited the federal tax rate drop in awarding bonuses to more than 1,200 employees companywide.
Great Southern Bancorp Inc. operates Great Southern Bank and will give its full-time employees $1,000 and part-time employees $500. They will get their bonuses Jan. 31, said spokeswoman Kelly Polonus.
Turner said the $4.5 billion asset banking company plans to issue more than $1 million overall in bonuses.
“When the federal tax rate lowered from 35 percent to 21 percent, if you’re paying 35 percent right now, you’re certainly going to see a benefit,” he said. “And that’s why banks should see benefits, because we have generally paid high taxes to start with.”
Kansas City-based Commerce Bancshares Inc. Chief Financial Officer Chuck Kim said in an email that the banking industry currently faces one of the highest effective federal tax rates.
With the lower rate in 2018, Kim said he’s also confident in awarding the bonuses early.
“We have spent considerable time looking at the new legislation, and tracking it as it progressed, and we have a fairly solid understanding of its impacts to our business today,” he said.
Commerce Bancshares did not have the total dollar amount available for its bonuses for 3,450 eligible full- and part-time employees. Full-time employees’ bonuses will be $1,000 and part-time workers will receive $250.
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