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> There's an argument to be made that buybacks benefit bigger shareholders disproportionately. That's not the issue. Non-founder CEOs are usually not among the
by lapcat 2y ago
> There's an argument to be made that buybacks benefit bigger shareholders disproportionately.
That's not the issue. Non-founder CEOs are usually not among the biggest shareholders. The issue is a kind of conflict of interest: CEOs with stock-based compensation can directly increase their own compensation by directing the company to do stock buybacks. The CEO is the one who makes the decision about whether the company does buybacks or not.
- triceratops 2y agoThe board of directors authorizes buybacks and dividends, not the CEO.
- lapcat 2y agoBoards of directors are rubber stamps. Corporate governance is a joke. Guess who sits on boards of directors? Other CEOs! CEOs get together (that is, conspire) to set their own compensation, which is exactly why, for example, they all get massive golden parachutes for failure. Even the largest institutional investor of a publicly owned corporation has less than 10% of the stock. Ownership is very diffuse, which is why management has so much power despite so little stock.
- triceratops 2y agoLooks like you've arrived at the actual problem. And it's not buybacks themselves.
- lapcat 2y agoThis is a dumb response and a false dilemma. They're both problems.