| I'm not sure I understand the hate on stock buybacks. Consider how this evolved. The traditional model was that companies would make a profit and would return some or all of that to shareholders in the form of dividends. Retaining profits, generally, doesn't help anyone. Some investors like dividends but some don't. Some use stocks as an income-generating stream. Some don't need or want the income as it generates tax events. So the share buyback was born. This allows a company to return profits to shareholders who want to sell while generally helping the share price as the supply of stock is decreasing. This is kind of a win-win for shareholders. What's different in that post-GFC we had zero or near-zero interest rates on corporate bonds such that what companies would do is borrow money for buybacks. Now this is a little different but I'm not sure I have a problem with it either. If the interest rate is fixed, this is essentially free money and it's really the government's fault that exists. What I do have a problem with is retaining profits overseas (to avoid US taxes) and then borrowing money to pay for buybacks and general operations. If your interest rate is near zero this is essentially deferring taxes indefinitely. Combine this with moving IP overseas and paying "royalties" to further reduce US profits (and thus taxes) and your tax bill essentially goes to zero. What I think should happen is that every dollar borrowed counts as a dollar of foreign profits repatriated to the US (and is thus taxed). If the company has no foreign profits retained offshore then no problem, it's not a taxable event. Executive pay is another matter. It's clearly out of control. I'm honestly not sure what you do about it however. Another thing that should change is that when a company goes through bankruptcy, there is a pecking order for creditors. Secured creditors are first, then bondholders, then preferential shareholders and then ordinary shareholders. There may be other classes too. Top of that pecking order should be non-executive worker pay and benefits. Additionally, pension funds should be held in trust such that they can never be spent by the company or claimed by creditors. |