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If companies want to reward executives directly they can cut out shareholders entirely and pay salaries and bonuses. If companies want to reward shareholders (
by terminalshort 1y ago
If companies want to reward executives directly they can cut out shareholders entirely and pay salaries and bonuses. If companies want to reward shareholders (including executives) they can pay dividends (which Apple did do under Jobs). Nothing about the priorities of companies changed with share buybacks.
- nyeah 1y agoFor one thing, buybacks aren't charged against profits. Compensation is.
- lotsofpulp 1y agoWhat does that even mean? Both stock buybacks and dividends are the distribution of profit. Compensation expenses (such as stock options, RSUs, etc) are accounted as expenses, which of course reduces profit.
- nyeah 1y ago[flagged]
- jibal 1y ago> Here's what you said Different person.
- badpun 1y agoDividends work as well for executives rewarded with stock (unless it's options).
- nyeah 1y agoBuybacks are sort of pay-in-kind dividends, sure. Nobody really loves returning actual money to investors. It's contrary to nature.
- CGMthrowaway 1y agoA buyback is literally returning actual money to investors.
- deleted 1y ago[deleted]
- sidewndr46 1y agoAs others have mentioned that isn't comparable because salaries are taxed. The tax rate on unrealized gains in the US is zero percent from what I understand.
- andrewlgood 1y agoNot correct. Capital Gains taxes depend on the holding period. Short term capital gains (stock held less than a year) are taxed at the same rate as salaries (ordinary income rate). Long term capital gains (stock held at least a year), are taxed on a reduced level that peaks out at 20% (depends on total taxable income) with a possible additional 3.8% Obama Net Investment Tax.
- sidewndr46 1y agoSo I buy a stock on Jan 1 for $1 and by June 15 it is worth $100. I'm going to pay $99 of short term capital gains at that point?
- labcomputer 1y agoCool. You covered short term gains and long term gains. Could you answer the question, which was unrealized gains?