SivBum

Repurchase Cutbacks Spotlight Who's Healthy and Who's Not

Unfortunately the bosses hold the purse strings and the votes. Repricing only goings on when they are underwater, never the other way around.


On Dec 11 08:48 PM Prudentinvestor wrote:

> Share buybacks inflate the value of options held by insiders disproportionately
> to their effect on the value of the stock.
>
> If an honest board wants to return surplus money to shareholders
> it should be in the form of dividends. Alternatively, the board should
> increase the strike price of options in the event of a share buyback
> to reflect the lower number of shares outstanding. This way, the
> value returned to all shareholders including management is the same
> per share, rather than favoring option holders at the expense of
> the other shareholders.
>