Stamford Advocate: U.S. airlines want a $50 billion bailout. They spent $45 billion buying back their stock.
“But what I am saying is that the terms of the bailout money that the airlines get from us should reflect the fact that a substantial part of their current financial problem is of their own making.”
“But it’s a point that we should keep in mind every time we see companies line up at the bailout trough. If many of these companies hadn’t spent lots of money to buy back their own stock to prop up its price, they wouldn’t need anywhere near as much money as they need now. “
“The main reason companies buy back stock in the market, of course, is to support their share price. High stock prices not only make shareholders happy but also increase top executives’ wealth by making their shareholdings and stock-purchase options more valuable.”
“In addition, in many cases higher share prices help trigger higher executive compensation because share price is one of the metrics that corporate boards often use to determine executives’ compensation packages.”