dilettantedude

My Reconsideration: Why Share Buybacks Are Pointless

There's another, huge reason companies buy back shares: to increase the bonuses of senior management. For most public companies, these bonuses are based at least in major part on EPS & stock price. Buying back shares increases both, even if the company hasn't improved its performance economically. Next time you see a company announcing a big buyback program, go look at the shareholder proxy for how incentive stock and bonuses are calculated. If they'll tell you, that is.