Seeking Alpha

More on corporate buybacks (previous): A real sticking point for the anti-buyback crowd is the...

More on corporate buybacks (previous): A real sticking point for the anti-buyback crowd is the conflict of interest presented when an exec is offered a bonus for meeting an EPS goal. The problem? With a buyback sleight-of-hand execs are often able to realize a large bonus - despite a poor stock performance - because their financial target isn't adjusted to reflect the new number of shares.
Comments (5)
  • I'd much prefer a higher dividend than a buyback.
    22 Nov 2011, 08:06 AM Reply Like
  • "because their financial target isn't adjusted to reflect the new number of shares."
    If true, and I don't accept this as a universal fact at all companies, then a total failure on the part of the board.
    22 Nov 2011, 08:15 AM Reply Like
  • Yeah. Apparently that little calculation is way beyond the math skills of the average member of the Compensation Committee. If only they realized that it would actually simplify the math if they just dropped the "per share" so they look at "E" instead of "EPS". Too hard for them.
    22 Nov 2011, 09:23 AM Reply Like
  • Wake up this has been going on for years......Where are auditors asleep? You bet this is almost as fraudulent as the picking the date for their stock option strike price...... These managers are clever but they have much in common with a snake......they molt there hide and move on to the next company.........thanks recruiters....
    22 Nov 2011, 09:25 AM Reply Like
  • Of course, if you project a shrinking market, then shrinking the company by buying back stock makes some sense, especially if you don't have much debt outstanding.
    22 Nov 2011, 11:06 AM Reply Like
DJIA (DIA) S&P 500 (SPY)