Still, the crisis has exposed the potential failings of a strategy embraced by many big companies: aligning their priorities with the interests of shareholders, many of whom are narrowly focused on the performance of a company’s shares. Shareholders, wanting stock prices to go higher, pushed management to use up cash on buybacks and dividends. And…
Category: buybacks
AT&T Sneaks Away Voting Rights With Coercive Buyback/Exchange Offer
We’ve got a sense of deja vu here. Back in the early 80’s companies tried to get the NYSE to approve coercive exchange offers of non- or limited-voting stock with a slightly higher return for shares with voting rights. We note that there is already such a security available for anyone who wants to buy…
Buybacks: The company says buy, but insiders sell – The Washington Post
VEA Vice Chair Nell Minow is quoted in this Washington Post story about executives selling their stock into buybacks: Repurchases enrich executives several ways, says Nell Minow, vice chair of ValueEdge Advisers, which counsels investors on corporate governance issues. “It’s a triple dip,” Minow said, that works like this: Here’s how stock buybacks work and…
Examining Corporate Priorities: The Impact of Stock Buybacks on Workers, Communities and Investors
In testimony before Congress, Harvard Law School professor Jesse Fried outlines the potential for abuse in stock buybacks: Executives can use buybacks to transfer value from public investors to themselves, reducing investor returns and, perhaps, distorting corporate decision-making in a way that reduces the size of the overall economic pie. This abuse is facilitated by…
Boeing and the siren call of share buybacks | Financial Times
One of the oddities of the modern US stock market is its strong predilection for share buybacks. Rather than finding profitable outlets for their cash holdings by investing internally, corporations have taken to shrugging their shoulders and simply handing the stuff back en masse. The idea of shrinking the number of shares outstanding has acquired…
Why Are Stock Buybacks So Popular? – The Atlantic
VEA Vice Chair Nell Minow is quoted in this Atlantic story about buybacks. Today, another effort is under way to raid corporate assets at the expense of employees, investors, and taxpayers. But this time, the attack isn’t coming from the outside. It’s coming from inside the citadel, perpetrated by the very chieftains who are supposed…
The Economist Who Put Stock Buybacks in Washington’s Crosshairs | The New Yorker
Between 2003 and 2007, [Harvard professor William] Lazonick noted that the number of stock buybacks among companies in the S. & P. 500 quadrupled. Then, when the financial crisis began, some of these same banks required billions of dollars in taxpayer bailouts to avoid collapse. In September, 2008, just after Lehman Brothers declared bankruptcy (after…
Activision Blizzard CEO’s $30M Pay Under Fire From Labor Union | Hollywood Reporter
The AFL-CIO’s secretary-treasurer, Liz Shuler, is calling on the SEC to “take action on corporate executives who abuse stock buybacks for their own personal gain.”The AFL-CIO, the nation’s largest federation of unions, has taken aim at Activision Blizzard CEO Bobby Kotick and his annual compensation in 2018 following a massive round of layoffs earlier this…
Make Passengers Safer? Boeing Just Made Shareholders Richer.
Our research, based on publicly available information, strongly suggests that the dedication of Boeing’s senior executives to increasing their company’s profits and stock yield—which also augmented their own compensation—resulted in management decisions that contributed to the two 737 MAX crashes. While much more information remains to be discovered, the reported evidence, still unfolding almost daily,…
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