Dilution, Disclosure, Equity Compensation, and Buybacks

The Business Lawyer; Vol. 74, Summer 2019

28 Pages Posted: 30 Oct 2019

Date Written: July 1, 2019

Abstract

Buybacks and equity compensation are two sides of a single coin. In a buyback, a company spends cash to repurchase its own shares, reducing its total outstanding share count. In the case of equity compensation, a company issues shares, receiving cash and tax benefits, increasing its total outstanding share count.

The two kinds of transactions — buybacks and equity compensation — are complementary, but their connection is obscured by the asymmetries in the timing, approval processes, and securities and financial disclosures for each. The article “Dilution, Disclosure, Equity Compensation, and Buybacks” (published The Business Lawyer, Vol. 74, 631-658, Summer 2019) describes those differences, and quantifies the share-denominated and dollar-denominated effects of buyback and equity compensation transactions over a 10-year period for selected Fortune 100 companies.

Keywords: buybacks, equity compensation, share repurchase, corporate finance

Suggested Citation

Dravis, Bruce, Dilution, Disclosure, Equity Compensation, and Buybacks (July 1, 2019). The Business Lawyer; Vol. 74, Summer 2019, Available at SSRN: https://ssrn.com/abstract=3472427 or http://dx.doi.org/10.2139/ssrn.3472427

Bruce Dravis (Contact Author)

American Bar Association ( email )

321 North Clark Street
Chicago, IL 60610
United States

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