Further to our recent report: "Senators Wage Campaign Against Stock Buybacks" and in response to Sens. Schumer's and Sander's New York Times op-ed, CII issued this welcome Statement of support for companies continuing to utilize their own best judgment on buybacks and other capital allocation decisions in lieu of legislation conditioning buyback eligibility on remedying public policy concerns. Although agreeing that the concerns about wage growth, retirement security and health care are important policy issues, the Statement says that - counter to the Senators' campaign - there is no evidence supporting that stock buybacks generally are contrary to companies investing in their R&D, human capital or equipment.
The foregoing notwithstanding, CII noted that not all buybacks are appropriate - reiterating its call for more robust buyback disclosure:
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That is why CII advocates robust disclosure about the rationale for buybacks. The board of directors should discuss in the company’s proxy statement its review and approval process for share repurchase programs with creating long-term value in mind. We also think management should disclose how buybacks affect performance metrics, perhaps in a table showing how the company would have performed absent a change in the number of shares outstanding.
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