Should stock BuyBacks be legal or illegal?

[JeffKeryk]

There is nothing wrong with buybacks. They are buying at a price they believe is undervalued; a smart thing to do with appropriate treasury cash.
Too much unused cash is bad management; cash needs to be put to work; buybacks are one example of that.
If a company was "supposed" to return cash to employees in some way due to a windfall (such as a tax windfall), but was used for stock buybacks, well that's just a foolish assumption.
Companies are under no responsibility to do that. Compensation is a function of the market.

 

[wings&wheels]

Originally Posted by JeffKeryk
There is nothing wrong with buybacks. They are buying at a price they believe is undervalued; a smart thing to do with appropriate treasury cash.
Too much unused cash is bad management; cash needs to be put to work; buybacks are one example of that.
If a company was "supposed" to return cash to employees in some way due to a windfall (such as a tax windfall), but was used for stock buybacks, well that's just a foolish assumption.
Companies are under no responsibility to do that. Compensation is a function of the market.


Well said....too much cash on the balance sheet also makes one a bit more attractive for a takeover or receive some attention from 'activist' investors with their own agendas.

How are things in the Valley? We spent 3+ years in Palo Alto doing M&A and integration. Fun place & fun times.

 

[JeffKeryk]

Originally Posted by wings&wheels


How are things in the Valley? We spent 3+ years in Palo Alto doing M&A and integration. Fun place & fun times.

Silicon Valley is a wonderful crazy place. Opportunity abounds.
But it boggles the mind how anyone can move here or how a company can compensate its employees.
Housing prices have dropped 10% from the 2018 summer highs, but my 1200 sq ft home in Los Gatos is still the better part of $2M.
Who can pay that? The property taxes? With CA 10% income tax?

But the opportunity is still boundless. I got my 1st degree at the age of 40; I am now deep into analytics to forecast and drive a multi billion corporation.
The execs continue to push the envelope on information demands.

M&A has changed things and continues to do so. Heck, we do several a year.
Oh yeah, stock buybacks are usually a great deal for shareholders like me.
And I am a tiny fish as compared to those Atherton people...
Palo Alto is such a great town to stroll around and grab a bite.

I flat out love it here.

 

[Mr Nice]

Must be nice to be a millionaire....

 

[JeffKeryk]

Originally Posted by Mr Nice
Must be nice to be a millionaire....

Friend, let me just say that I am a 30+ year member of A.A.
I know the other side of life; most of my friends are dead; I was homeless for years.
Because of CA education, Silicon Valley opportunity (including buybacks) I am blessed to be able to share with others not as lucky as me.
(FYI, I do not subscribe to any religion but have a deep respect for all of them.)

 

[wings&wheels]

[/quote]
Friend, let me just say that I am a 30+ year member of A.A.
I know the other side of life; most of my friends are dead; I was homeless for years.
Because of CA education, Silicon Valley opportunity (including buybacks) I am blessed to be able to share with others not as lucky as me.
(FYI, I do not subscribe to any religion but have a deep respect for all of them.)[/quote]

Congratulations on all of the above, an American success story. We share some background....at somepoint you look around and realize that you just want more, then you go. I grew up in a dead mill town w/ some family laughing at my dreams of being a pilot. I also remember the look on my Parents eyes when I first took them over the city in my airplane...

 

[ZZman]

Originally Posted by alarmguy
Originally Posted by ZZman
I would rather see them illegal and have the companies put the money into the business or the employees.


I believe we live in a free country and people/companies should be able to do whatever they want with their money. If not, they can always move to China (live in a corporate commune) or Venezuela (didnt work out to well for them either) and be told what to do.

A public company responsibility in this case you mention, is to its SHAREHOLDERS, you know, the people who invest in the company.

The fiduciary responsibility is to the shareholder to create as much value in the company as the company can to increase the share price NOT put money into the employees, by buying back its own stock it creates more value in the remaining shares, the company job is to pay employees as little as possible and get as much profit out of their product as possible.

If the company fails to do that, they actually can and DO get sued by the shareholders which is why people buy the company stock in the first place.

It ALWAYS amazes me how some people think people and companies should be forced by laws and government officials (no less), to spend and use people own earned money. Good god ... wake up.


But we don't live in a free world or society. We are regulated/controlled our whole lives. By parents, teachers. Employers, local, state and Fed laws etc.. regulations/controls mean stability and order, not abuse and chaos.

Their duty is to look after the interests of the shareholders. Wouldn't happy employees who do good work and help make a business successful be of interest to shareholders?

So you are saying it is a public companies job to screw employees if it can to benefit shareholders? Maybe we need more private companies who actually care about employees. Who is actually doing the work anyway?

 

[JeffKeryk]

A company's responsibility is to maximize the wealth of the shareholders.
For the most part, they will try and keep good employees.
Sometimes politics overrides prudent choices, to be sure.

But there are no guarantees.

 

[wings&wheels]

Originally Posted by ZZman
Originally Posted by alarmguy
Originally Posted by ZZman
I would rather see them illegal and have the companies put the money into the business or the employees.


I believe we live in a free country and people/companies should be able to do whatever they want with their money. If not, they can always move to China (live in a corporate commune) or Venezuela (didnt work out to well for them either) and be told what to do.

A public company responsibility in this case you mention, is to its SHAREHOLDERS, you know, the people who invest in the company.

The fiduciary responsibility is to the shareholder to create as much value in the company as the company can to increase the share price NOT put money into the employees, by buying back its own stock it creates more value in the remaining shares, the company job is to pay employees as little as possible and get as much profit out of their product as possible.
s increase,
If the company fails to do that, they actually can and DO get sued by the shareholders which is why people buy the company stock in the first place.

It ALWAYS amazes me how some people think people and companies should be forced by laws and government officials (no less), to spend and use people own earned money. Good god ... wake up.


But we don't live in a free world or society. We are regulated/controlled our whole lives. By parents, teachers. Employers, local, state and Fed laws etc.. regulations/controls mean stability and order, not abuse and chaos.

Their duty is to look after the interests of the shareholders. Wouldn't happy employees who do good work and help make a business successful be of interest to shareholders?

So you are saying it is a public companies job to screw employees if it can to benefit shareholders? Maybe we need more private companies who actually care about employees. Who is actually doing the work anyway?



A lot going on here, and some of this answer is at the macro level and theoretical, and there will always be exceptions, but here it goes;

Companies are responsible to shareholders who provide their capital, by investing in company stock, in return for potential appreciation of their investment; risk-reward. Econ 100...

Employees doing good work is in the interest of the company who rewards their labor with a comp package (comp, benefits, work environment, etc.). Labor is a mobile asset in that employees are free to take their product, labor, to other employers for better opportunity or rewards. Companies who do not provide sufficient reward for the work will have trouble attracting and retaining the best labor until rewards increase. Obviously there are exceptions such as areas with limited opportunity, etc., and areas where it works to the extreme such as Silicon Valley where folks jump for $5k/yr and better free mocha latte's in the break room (I am only half joking there). In this way the overall labor market is self adjusting; reward better=get better talent.

Who is actually doing the work? In an efficient company; everyone from the CEO to the facilities staff..just doing different work, but all are working.

 

[Donald]

Companies need to hire and retain qualified employees. If all they had were a bunch if bozos they company would not do very well. Most companies participate with indirectly sharing salary data. So they have a pretty good idea of what the normal salary is for a certain job skill in a certain location of the country. They can choose to pay just below avg or just avg or above avg. They are not going to pay half nor double.

For example state workers were paid below avg but the pension was generally much better than avg.

 

[SeaJay]

Originally Posted by ZZman

But we don't live in a free world or society. We are regulated/controlled our whole lives. By parents, teachers. Employers, local, state and Fed laws etc.. regulations/controls mean stability and order, not abuse and chaos.

Their duty is to look after the interests of the shareholders. Wouldn't happy employees who do good work and help make a business successful be of interest to shareholders?

So you are saying it is a public companies job to screw employees if it can to benefit shareholders? Maybe we need more private companies who actually care about employees. Who is actually doing the work anyway?


It is the legal fiduciary duty for the board of directors to do everything to maximize the value of the entity for its stockholders. If getting rid of some employees will bring a greater return on profits and a greater value to the stock, then that is what they have to do.

 

[Silverado12]

Originally Posted by ZZman
Originally Posted by alarmguy
Originally Posted by ZZman
I would rather see them illegal and have the companies put the money into the business or the employees.


I believe we live in a free country and people/companies should be able to do whatever they want with their money. If not, they can always move to China (live in a corporate commune) or Venezuela (didnt work out to well for them either) and be told what to do.

A public company responsibility in this case you mention, is to its SHAREHOLDERS, you know, the people who invest in the company.

The fiduciary responsibility is to the shareholder to create as much value in the company as the company can to increase the share price NOT put money into the employees, by buying back its own stock it creates more value in the remaining shares, the company job is to pay employees as little as possible and get as much profit out of their product as possible.

If the company fails to do that, they actually can and DO get sued by the shareholders which is why people buy the company stock in the first place.

It ALWAYS amazes me how some people think people and companies should be forced by laws and government officials (no less), to spend and use people own earned money. Good god ... wake up.


But we don't live in a free world or society. We are regulated/controlled our whole lives. By parents, teachers. Employers, local, state and Fed laws etc.. regulations/controls mean stability and order, not abuse and chaos.

Their duty is to look after the interests of the shareholders. Wouldn't happy employees who do good work and help make a business successful be of interest to shareholders?

So you are saying it is a public companies job to screw employees if it can to benefit shareholders? Maybe we need more private companies who actually care about employees. Who is actually doing the work anyway?

ZZ, I agree with you 100%. I believe a company should be and should want to be obligated to the betterment of society as a whole. No sense in stepping on employees and paying them squat just because they can. It's come to where a good sociopath is CEO material, and that's just pitiful.

 

[eljefino]

Originally Posted by Donald
Companies need to hire and retain qualified employees. If all they had were a bunch if bozos they company would not do very well.



There are companies out there looking to make capital investments so they can hire dumber, cheaper employees.

As an example, look at those fancy alignment racks that have a CGI picture of the front end of the car being aligned, so a cheaper dumber tech can just copy that motion.

Some places, some industries, are just looking to out-cheap the competition. No wonder we get such mediocrity.

 

[alarmguy]

Originally Posted by SeaJay
Originally Posted by ZZman

But we don't live in a free world or society. We are regulated/controlled our whole lives. By parents, teachers. Employers, local, state and Fed laws etc.. regulations/controls mean stability and order, not abuse and chaos.

Their duty is to look after the interests of the shareholders. Wouldn't happy employees who do good work and help make a business successful be of interest to shareholders?

So you are saying it is a public companies job to screw employees if it can to benefit shareholders? Maybe we need more private companies who actually care about employees. Who is actually doing the work anyway?


It is the legal fiduciary duty for the board of directors to do everything to maximize the value of the entity for its stockholders. If getting rid of some employees will bring a greater return on profits and a greater value to the stock, then that is what they have to do.


^^^ Exactly ^^^
Boy I read some of the whacked out responses here and its really scary. Maybe some of you are not from the United States of America?
We are a free people, we can earn as much money as we want and no one can take our money and tell us how to spend it.

What the heck? Do some of you want to be some kind of czar/dictator and take peoples money and profits from companies and tell them how they must spend it? Never in the history of mankind has a dictator EVER worked out to benefit people of ANY country!

Gosh and you people vote?
Like hello? Freedom, earn as much as you want, as much as you work for, spend it as you want.
Start your own business, grow it to greatness and invest the profits any way you want.
Oops, your just a plain old worker sliding by in life? Then if you dont like your job, get another one, dont elect someone to be a dictator and confiscate peoples wages and company profits.

Hey, USA = Freedom, do whatever you like with your life and dont tell others what to do.

This has go to be the stupidest thread I ever read with the exception of some people who understand, we are individuals, no one owes you anything. If you work hard and make it big you wont owe anyone anything either.

DO you know, the top 10% hard working wage earners in this country pay 53 FIFTY THREE percent of all federal income taxes! DO the math man and over 40% pay no federal taxes at all.

 

[wings&wheels]

Originally Posted by alarmguy

^^^ Exactly ^^^
Boy I read some of the whacked out responses here and its really scary. Maybe some of you are not from the United States of America?
We are a free people, we can earn as much money as we want and no one can take our money and tell us how to spend it.

What the heck? Do some of you want to be some kind of czar/dictator and take peoples money and profits from companies and tell them how they must spend it? Never in the history of mankind has a dictator EVER worked out to benefit people of ANY country!

Gosh and you people vote?
Like hello? Freedom, earn as much as you want, as much as you work for, spend it as you want.
Start your own business, grow it to greatness and invest the profits any way you want.
Oops, your just a plain old worker sliding by in life? Then if you dont like your job, get another one, dont elect someone to be a dictator and confiscate peoples wages and company profits.

Hey, USA = Freedom, do whatever you like with your life and dont tell others what to do.

This has go to be the stupidest thread I ever read with the exception of some people who understand, we are individuals, no one owes you anything. If you work hard and make it big you wont owe anyone anything either.

DO you know, the top 10% hard working wage earners in this country pay 53 FIFTY THREE percent of all federal income taxes! DO the math man and over 40% pay no federal taxes at all.



Don't hold back. How do you REALLY feel?

 

[Mr Nice]

Originally Posted by JeffKeryk
A company's responsibility is to maximize the wealth of the shareholders.
For the most part, they will try and keep good employees.
Sometimes politics overrides prudent choices, to be sure.

But there are no guarantees.


Yep.

Employees are further down the totem pole of priorities.

 

[AdRock]

Originally Posted by alarmguy
Originally Posted by SeaJay
Originally Posted by ZZman

But we don't live in a free world or society. We are regulated/controlled our whole lives. By parents, teachers. Employers, local, state and Fed laws etc.. regulations/controls mean stability and order, not abuse and chaos.

Their duty is to look after the interests of the shareholders. Wouldn't happy employees who do good work and help make a business successful be of interest to shareholders?

So you are saying it is a public companies job to screw employees if it can to benefit shareholders? Maybe we need more private companies who actually care about employees. Who is actually doing the work anyway?


It is the legal fiduciary duty for the board of directors to do everything to maximize the value of the entity for its stockholders. If getting rid of some employees will bring a greater return on profits and a greater value to the stock, then that is what they have to do.


^^^ Exactly ^^^
Boy I read some of the whacked out responses here and its really scary. Maybe some of you are not from the United States of America?
We are a free people, we can earn as much money as we want and no one can take our money and tell us how to spend it.

What the heck? Do some of you want to be some kind of czar/dictator and take peoples money and profits from companies and tell them how they must spend it? Never in the history of mankind has a dictator EVER worked out to benefit people of ANY country!

Gosh and you people vote?
Like hello? Freedom, earn as much as you want, as much as you work for, spend it as you want.
Start your own business, grow it to greatness and invest the profits any way you want.
Oops, your just a plain old worker sliding by in life? Then if you dont like your job, get another one, dont elect someone to be a dictator and confiscate peoples wages and company profits.

Hey, USA = Freedom, do whatever you like with your life and dont tell others what to do.

This has go to be the stupidest thread I ever read with the exception of some people who understand, we are individuals, no one owes you anything. If you work hard and make it big you wont owe anyone anything either.

DO you know, the top 10% hard working wage earners in this country pay 53 FIFTY THREE percent of all federal income taxes! DO the math man and over 40% pay no federal taxes at all.


Alarmguy, you said pretty much exactly what I wanted to say.

 

[alarmguy]

Adrock, God Bless the great state of Texas!
Its a bit scary, now that people from CA have messed up their own state with their horrible voting choices, now they are escaping CA and invading your state. lets hope they learned! *L*

Wingsandwheels , got a good laugh from your post *LOL* thanks, glad some people from up north might understand or not get nuts over my post. (I was born and raised in the northeast and finally escaped) *L* pretty soon they will be burning witches up there again, its getting so crazy. )

 

[ZZman]

Originally Posted by alarmguy


^^^ Exactly ^^^
Boy I read some of the whacked out responses here and its really scary. Maybe some of you are not from the United States of America?
We are a free people, we can earn as much money as we want and no one can take our money and tell us how to spend it.

What the heck? Do some of you want to be some kind of czar/dictator and take peoples money and profits from companies and tell them how they must spend it? Never in the history of mankind has a dictator EVER worked out to benefit people of ANY country!

Gosh and you people vote?
Like hello? Freedom, earn as much as you want, as much as you work for, spend it as you want.
Start your own business, grow it to greatness and invest the profits any way you want.
Oops, your just a plain old worker sliding by in life? Then if you dont like your job, get another one, dont elect someone to be a dictator and confiscate peoples wages and company profits.

Hey, USA = Freedom, do whatever you like with your life and dont tell others what to do.

This has go to be the stupidest thread I ever read with the exception of some people who understand, we are individuals, no one owes you anything. If you work hard and make it big you wont owe anyone anything either.

DO you know, the top 10% hard working wage earners in this country pay 53 FIFTY THREE percent of all federal income taxes! DO the math man and over 40% pay no federal taxes at all.


No one can take your money? I assume you pay taxes.

Why go the extreme example? No one said dictator or confiscate anything. It was spreading the wealth to all participants in the companies success not just the investors.

People want capitalism that benefits all and society like after WW II when the middle class grew. Not capitalism that increasingly benefits the few.

And of course the people at the top pay the most taxes. They have almost all the wealth. If you break that down even more less than 5 % pay the majority of taxes. Taxes paid isn't the problem. Most Americans having less to live on is.

 

[ZZman]

Throughout history wealth has always been redistributed. The problem has been when wealth was redistributed up to the few and not down to more people. We are again suffering stagnation in the middle class as it continues to be redistributed up.