I honestly can't see how a share buyback could benefit the company in the long run. Aren't there plenty of better ways to spend that money? For example, making sure you keep the growing number of more experienced employees who have been flocking to our competitors from leaving?
11 replies (most recent on top)
Share buy-backs signal two things: 1) the company does not have a queue of valuable projects to fund, and 2) while ordinary stockholders (including us employees) benefit, executives with stock options benefit exponentially. Watch the SEC filings to see how our management cash out their options right after a buy-back period.
Post ID: @kfa+1caDHwHQ
"our net income is going to decrease with the challenging business environment "
What's the challenge? The EIA is forecasting 2026 oil demand at almost 5% higher than 2019.
Increase EPS and reduce future dividend exposure.
Stock buybacks signal a company expects a better return on their investment buying back stock to shore up a struggling price than further capital investments. We formerly had lots of big projects but are down to just a handful. Permian only needs five rigs instead of the promised 25 rigs. No acquisitions on the horizon, so no need for cash or further debt reduction. Dividend is fine for now. buybacks are the answer.
reduce number of outstanding shares in the market to make our earnings per share look good during our qtrly earnings call
our net income is going to decrease with the challenging business environment so improving/maintaining our eps will give the impression that we are doing ok but in actual fact, cvx is facing a slow death from a cancer within
The share buybacks are a different way to earn cash to the shareholders. I encourage everyone to listen to the Q2 Conference call, or read the transcript. Jay was his usual good self, but I thought this was Pierre's best call to date. And the new is very positive.
it won't be long before chevron is the only buyer of chevron stock - ESG is taking over and we have nothing to give them.
Juice the stock
If you understand how executives are evaluated and compensated, you’ll see why they make these decisions. First, executive performance is graded by the stock price. A higher stock price and dividend means a good PMP year. Now how are CEOs compensated? The CEO gets paid a salary that is relatively low compared to the other compensation methods. Then he’s paid in stock awards. Last he’s paid in stock options. The CEO was paid <$2MM in salary and over $20MM in stock/options. Those options in particular have big value, but only if the stock goes up. So they do buybacks to reduces the number of shares in circulation, shifting the supply/demand balance. Stock buybacks are also a sign of strength to signal the almighty stock analysts that the company is healthy, further pressuring an upgrade and positive price guidance.
https://www.marketwatch.com/story/chevron-ceo-mk-wirth-total-compensation-tops-29-million-in-2020-but-falls-123-from-the-year-before-2021-04-08
Our executives only care about shareholders. The dividends and stock buybacks are the #1 priority. Hence why they have not been truly trying to fix employee morale except other than saying thr employees own their work experience so its up to you. Well a lot of people are owning it by leaving.
Why do companies buy back shares:
1) to give to the execs
2) reduce taxes
3) Because they can
4) political changes
4) similar to a loan that a person has
For an individual having no loans and everything paid off if the same as a private company. A public company is like someone with a ton of loans and typically services that debt very very well. When they buy back stock it’s like they are paying extra on the home mortgage so that they can get it paid below (pmi number). But it’s slightly different as they are never actually going to take the company private again but they can substantially reduce taxes.