Share buybacks are lazy

CEO’s are gaslighting you.

How are listed company share buybacks considered a return of cash to shareholders?

It’s simply a company buying their own shares in the public market and adding them to their treasury stock.

What this action does do, is reduce the shares outstanding (on issue) which improves the “total shareholder return” and the “earnings per share”.

Invariably, much of senior management compensation/remuneration is based on increasing these two metrics.

By the way, buying back your own shares isn’t any stroke of genius. In fact, it’s lazy.

A company is lazy if it can’t use its excess cash for the purpose of growth such as re-investing in its own operations or acquire someone……or improve its capital/debt structure.

A dividend is the best return of cash for a shareholder but this doesn’t help the executives bonuses.