Another major U.S. employer has announced a one-time employee bonus payment related to the new tax law. Home Depot Inc. (NYSE: HD) announced Thursday morning that the company will pay a one-time bonus of up to $1,000 to its U.S. workers. The payment comes in addition to the company’s Success Sharing bonus plan for hourly workers.
Home Depot said it expects to take a fourth-quarter charge of about $150 million related to repatriating offshore cash. Coupled with the bonus payment, the company expects a negative impact of about $0.19 per share to its previous fiscal year earnings per share guidance of $7.36.
The company has not yet estimated the effect of the tax law changes on 2018 results, but it expects the net impact to be beneficial. Home Depot said it will provide guidance for the 2018 fiscal year when it reports quarterly earnings on February 20.
CEO Craig Menear said:
We are pleased to be able to provide this additional reward to our associates for continuing to deliver outstanding customer service. This incremental investment in our associates was made possible by the new tax reform bill.
Other large companies that have announced $1,000 cash bonus payments include AT&T, Bank of America and several major airlines. Walmart, like Home Depot, is paying one-time bonuses on a graduated scale.
Walmart and Starbucks, among others, are raising hourly and some salaried pay as well. While the lower corporate tax rate helps support higher wages, low-paying firms may have trouble attracting new workers with unemployment running near 4%. Finding new employees is a problem that has been solved in the past by raising pay. Maybe across-the-board pay increases are about to show up again.
Home Depot’s stock traded down about 0.7% late Thursday morning, at $204.71 in a 52-week range of $136.33 to $207.10. The 12-month consensus price target is $203.68.