94chem said:

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northeastag said:

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94chem said:

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northeastag said:

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94chem said:

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bmks270 said:

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Equity compensation makes sure the employees have skin in the game for the success of the company.

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Same company 26 years. Wouldn't keep a single Share one more minute than I was forced to. Liking my job is all the skin I need, boomer.

Executives believe stuff like this as a form of acting out. They're just telling us that THEY don't have loyalty and need to be bribed to stay.

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So you would prefer that executives receive the same compensation regardless of whether the company performs well, or poorly?

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Didn't say that. But, since you asked, the metrics are generally useless, and company shares create a huge conflict of interest.

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Just to clarify, your comment is that executives owning shares in the company that employs them creates a huge conflict of interest?

Also, what metrics are you referring to?

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Yes, that's exactly what I'm saying. Decrease the denominator. Make the short term numbers look better. Slash strategic expenditures. Cozy up to the shareholders (dividend bribes can help with that). Profit. Parachute. Bora Bora.

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While you are at it, be sure you never buy from a small business where the owner/operator is incentivized to sell you their product or service, given their conflict of interest!

Casey TableTennis said:

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94chem said:

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northeastag said:

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94chem said:

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northeastag said:

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94chem said:

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bmks270 said:

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Equity compensation makes sure the employees have skin in the game for the success of the company.

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Same company 26 years. Wouldn't keep a single Share one more minute than I was forced to. Liking my job is all the skin I need, boomer.

Executives believe stuff like this as a form of acting out. They're just telling us that THEY don't have loyalty and need to be bribed to stay.

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So you would prefer that executives receive the same compensation regardless of whether the company performs well, or poorly?

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Didn't say that. But, since you asked, the metrics are generally useless, and company shares create a huge conflict of interest.

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Just to clarify, your comment is that executives owning shares in the company that employs them creates a huge conflict of interest?

Also, what metrics are you referring to?

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Yes, that's exactly what I'm saying. Decrease the denominator. Make the short term numbers look better. Slash strategic expenditures. Cozy up to the shareholders (dividend bribes can help with that). Profit. Parachute. Bora Bora.

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While you are at it, be sure you never buy from a small business where the owner/operator is incentivized to sell you their product or service, given their conflict of interest!

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Totally different. This isn't F16. Try not to compare komodo dragons to blueberry scones.

94chem said:

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Casey TableTennis said:

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94chem said:

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northeastag said:

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94chem said:

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northeastag said:

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94chem said:

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bmks270 said:

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Equity compensation makes sure the employees have skin in the game for the success of the company.

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Same company 26 years. Wouldn't keep a single Share one more minute than I was forced to. Liking my job is all the skin I need, boomer.

Executives believe stuff like this as a form of acting out. They're just telling us that THEY don't have loyalty and need to be bribed to stay.

---

So you would prefer that executives receive the same compensation regardless of whether the company performs well, or poorly?

---

Didn't say that. But, since you asked, the metrics are generally useless, and company shares create a huge conflict of interest.

---

Just to clarify, your comment is that executives owning shares in the company that employs them creates a huge conflict of interest?

Also, what metrics are you referring to?

---

Yes, that's exactly what I'm saying. Decrease the denominator. Make the short term numbers look better. Slash strategic expenditures. Cozy up to the shareholders (dividend bribes can help with that). Profit. Parachute. Bora Bora.

---

While you are at it, be sure you never buy from a small business where the owner/operator is incentivized to sell you their product or service, given their conflict of interest!

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Totally different. This isn't F16. Try not to compare komodo dragons to blueberry scones.

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Your earlier comments are ludicrous. You doubled down on management and ownership should be disassociated.

We can debate all day (actually, I have little interest in doing so) the degree of conflict of interest/incentivization, that is optimal. You clearly said none is best…

It seems to me that buybacks are good if the company's analysis is that it increases shareholder value more than investing in their core business which certainly happens from time to time. For example an oil & gas company may be able to show that oil & gas prices don't support their target rate of return at a given price level and point in time but that when prices rise they will reinvest $ in said core business. I see nothing wrong with that as an option. In that scenario other options for excess cash flow might be acquiring distressed companies or assets at a discounted price that would not be distressed at higher pricing , or pay down debt. The right answer Could be a mix of all of the above as well. Yet another option would be increase your shareholders dividend.

halfastros81 said:

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It seems to me that buybacks are good if the company's analysis is that it increases shareholder value more than investing in their core business which certainly happens from time to time. For example an oil & gas company may be able to show that oil & gas prices don't support their target rate of return at a given price level and point in time but that when prices rise they will reinvest $ in said core business. I see nothing wrong with that as an option. In that scenario other options for excess cash flow might be acquiring distressed companies or assets at a discounted price that would not be distressed at higher pricing , or pay down debt. The right answer Could be a mix of all of the above as well. Yet another option would be increase your shareholders dividend.

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Agree. There is no reason for this one practical alternative to become a political issue. One more option that I haven't seen mentioned is a special one-time dividend. Whether that's better for shareholders depends on their individual tax situation, so it's used less often.

Aglaw97 said:

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This thread has morphed from a discussion around stock buybacks to executives and executive comp. They are really two separate debates.

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Not always which is the point some people are making.

birdman said:

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Aglaw97 said:

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This thread has morphed from a discussion around stock buybacks to executives and executive comp. They are really two separate debates.

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Not always which is the point some people are making.

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Many of the comments are emotionally charged comments about executives. Which is fine. That's a debate we can have. But stock buybacks are almost always a decision to reinvest in the business and pushed on management by investors. Arguing that executives do this to inflate stock prices is simply false. Evidence shows it does little to prop up stock price.

And I'm confused by the comments that stock held by employees or executives is a conflict of interest. Again, investors hammer management teams if the vast majority of their compensation isn't in stock.

Aglaw97 said:

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birdman said:

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Aglaw97 said:

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This thread has morphed from a discussion around stock buybacks to executives and executive comp. They are really two separate debates.

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Not always which is the point some people are making.

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Many of the comments are emotionally charged comments about executives. Which is fine. That's a debate we can have. But stock buybacks are almost always a decision to reinvest in the business and pushed on management by investors. Arguing that executives do this to inflate stock prices is simply false. Evidence shows it does little to prop up stock price.

And I'm confused by the comments that stock held by employees or executives is a conflict of interest. Again, investors hammer management teams if the vast majority of their compensation isn't in stock.

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Intuitively I would have said the opposite.

From S&P Research

Quote:

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As our results suggest, over a long investment horizon, buyback portfolios generated positive excess returns over their parent indices in the U.S. market. All of the buyback portfolios tested generated higher average monthly excess returns over their benchmark indices in down markets than in up markets, no matter which weighting schemes were employed in the portfolio construction.

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I think the bolded part is particularly why I would have thought the opposite to be true. When the market is net sell, you would still have a captive buyer, so to speak, and it's you.

edit to hopefully fix link

Sims said:

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Aglaw97 said:

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birdman said:

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Aglaw97 said:

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This thread has morphed from a discussion around stock buybacks to executives and executive comp. They are really two separate debates.

---

Not always which is the point some people are making.

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Many of the comments are emotionally charged comments about executives. Which is fine. That's a debate we can have. But stock buybacks are almost always a decision to reinvest in the business and pushed on management by investors. Arguing that executives do this to inflate stock prices is simply false. Evidence shows it does little to prop up stock price.

And I'm confused by the comments that stock held by employees or executives is a conflict of interest. Again, investors hammer management teams if the vast majority of their compensation isn't in stock.

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Intuitively I would have said the opposite.

From S&P Research

Quote:

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As our results suggest, over a long investment horizon, buyback portfolios generated positive excess returns over their parent indices in the U.S. market. All of the buyback portfolios tested generated higher average monthly excess returns over their benchmark indices in down markets than in up markets, no matter which weighting schemes were employed in the portfolio construction.

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I think the bolded part is particularly why I would have thought the opposite to be true. When the market is net sell, you would still have a captive buyer, so to speak, and it's you.

edit to hopefully fix link

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The article below does a good job of summarizing some of the facts and fiction, IMO. Yes buybacks can lead to appreciated stock prices, but that's more driven by subsequent demonstration that the use of cash was smart. Very rarely do companies get an immediate bump by announcing a buyback or initiating one. The market will wait to see if the use of cash was prudent (vs. using it for other investments besides in the Company itself) and whether the company continues to exceed earnings expectations without a ton of leverage being added.

https://knowledge.wharton.upenn.edu/article/making-sense-of-stock-buybacks/