honestbob

Stock Buybacks: What's Causing the Decline?

Management likes to get most of their compensation in stock options and appreciation rights that can be sold and the profits taxed as long term capital gains rather than regular income. So buying back stock when the market is strong and you can push the price even higher benefits the executives. On the other hand, buying back stock when the price is below their exercise price does nothing to benefit the executives. Think about it, why were most buyback programs done when the prices are high, not when they are low? If the executives and their boards were not all in this deal together maybe they would quit buying high and selling low.