Stock buybacks
By John Schroy, on June 16th, 2006 |

In the 2005 Berkshire-Hathaway annual report, Warren Buffet points to the unethical aspects of the buyback-option schemes so common in the US stock market. He noted that “Too often, executive compensation in the US. is ridiculously out of line with performance. … the deck is stacked against investors when it comes to the CEO’s pay. … CEOs understand … that every dime paid out in dividends reduces the value of all outstanding options”
Stock buybacks
By John Schroy, on June 16th, 2006 |

On June 12, 2006, the Wall Street Journal headlined, “Big companies put record sums into buybacks — repurchases aim to bolster shares but come at expense of investments in growth”. For capital flow analysts, this is hardly news, but for the WSJ to acknowledge or even suggest that the practice may have negative connotations is news!
Q1 2006
By John Schroy, on June 16th, 2006 |

Disbursement of corporate cash through dividends and stock buybacks totaled $1,073.5 billion in Q1 2006 (annualized). This massive distribution exceeded net profits after tax and was financed by selling bonds and mortgages. Reserves for depreciation were also used to finance buybacks and dividends.
These disbursements were double annualized net corporate profits after tax of $509.5
Popular Articles