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ARTICLE · 25 APRIL 2019

Share Buybacks & Executive Compensation: Aligning Management's Incentives

The debate concerning share buybacks is complex and politically charged

CanadaCorporate/Commercial Law

As we previously discussed, the use of share buybacks has accelerated in recent years, both in Canada and the United States. This has sparked anxious debate over the extent to which buybacks can form part of an effective long-term growth strategy. Particularly in the United States—where buybacks hit a record of more than $1 trillion USD in 2018 following tax reforms—commentators have blamed buybacks for various ills, including wage stagnation, income inequality, and underinvestment in R&D. In response, some U.S. legislators have sought to curb their use, such as by tying buybacks to conditions including paying employees a certain hourly wage, and providing a minimum number of paid sick days.

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