Stock buybacks

This year’s edition of the annual Institute for Policy Studies Executive Excess report finds that the 100 S&P 500 firms with the lowest median wages, a group we’ve dubbed the “Low-Wage 100,” blew $522 billion over the past five years on stock buybacks. Nearly half of these companies spent more on this once-illegal financial maneuver than they spent on capital investment vital to long-term competitiveness.

Why the fixation on buybacks? This is a CEO pay-inflating financial scam, pure and simple. When companies repurchase their own shares, they artificially boost share prices and the value of the stock-based compensation that makes up about 80 percent of CEO pay. An SEC investigation confirmed that CEOs regularly time the sale of their personal stock holdings to cash in on the price surge that typically follows a buyback announcement.