author

Susan Holmberg

Senior Editor and Researcher with the Institute for Local Self-Reliance’s Independent Business Initiative

One reason firms repurchase shares is to avoid dilution from executive stock compensation programs. Between 1940 and 1970, average CEO pay remained below $1 million (in 2000 dollars). In 1951, 90% of stocks were owned by individual households. Companies with higher CEO pay compensate their boards more generously. Stock buybacks redirect available cash from investments to repurchase shares, temporarily driving up share prices at the expense of investment. "Patient capital" (low-interest, long-term loans) via public financing helped Germany resist colonization by institutional investors (seeking short-term gains).
Fighting Short-Termism with Worker Power
Codetermination
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