Share Buybacks Driven By Executive Compensation?

No other topic splits opinions in the financial community like share buybacks.

The pro buyback camp believes that using buybacks to return excess cash, is a prudent way of improving shareholder returns while those against buybacks claim that they are a waste of money and only benefit managers by boosting executive compensation.

Each argument has its valid points; some buybacks are clearly a waste of shareholder funds, but the well-executed buyback can create a lot of wealth for shareholders.

Stock Buybacks Surge As Markets Fall

Unfortunately, more often than not it is the case that buybacks are used by company managements to increase their own rewards. Flawed executive incentive plans, supported by complacent boards allow senior managers to authorize buybacks with company...