The New R&D: Repurchases & Dividends

[NYD3030]

I figure some of you will get a kick out of this one - particularly the last full paragraph, which is classic.

Snark aside, I think he does make a good point re: EPS in the long tail of the Great Recession.  Mediocre growth + the "new R&D" = surging equities market.

http://www.thereformedbroker.com/2013/05/30/the-new-rd-repurchases-and-dividends/

Edit:  Of course, I should attach the link...

[Joet]

actually I thought (generally speaking) repurchases are used to award RSU/options to executives and (generally) retire very little float/outstanding shares (if any) ? no? didnt read the article, apologies. I'm sure there are some exemptions. Basically the tax code is being leveraged to pay executives the wages that would normally fall in the 33/38 tax brackets at capital gain rates. Yay

[Undecided]

actually I thought (generally speaking) repurchases are used to award RSU/options to executives and (generally) retire very little float/outstanding shares (if any) ? no? didnt read the article, apologies. I'm sure there are some exemptions. Basically the tax code is being leveraged to pay executives the wages that would normally fall in the 33/38 tax brackets at capital gain rates. Yay

They are mostly separate economic issues. While (especially in Silicon Valley) some issuers may have a practice of repurchasing to offset dilution from equity awards, I think relatively few issuers directly "recycle" (i.e., treat repurchased shares as increasing the number of shares available for equity awards), so generally the size of the equity award pool will be presented for a vote by shareholders, as a separate action from the board's determination to authorize a share repurchase program. That there's a tax benefit to recipients of taking some of their comp as equity rather than salary is a separate issue (really a tax-code issue, if you ask me, as I generally like the alignment of company success and employee compensation that comes from payment in equity).