U.S. companies announced a record $166 billion in share buybacks last month, the highest dollar amount ever recorded in July. And such buybacks are well ahead of the previous year-to-date record set in 2022, according to Bloomberg. Companies repurchase their shares for a variety of reasons: to increase share prices, use up cash and even boost employee morale. But the main goal is typically to increase shareholder value. Just today, grocery chain Sprouts announced that its board of directors approved a new $1 billion share repurchase program. In buyback cases where employees also own a piece of the pie, their shares will also be worth more, though some companies will use this strategy to offset dilution of employee-owned shares. Typical in tech companies and early-stage startups, employee stock purchase programs (ESOPs) allow workers to be compensated in their employer’s stock. And there are a number of different types of ESOPs, as contributor Mary Josephs describes in her recent story. It can be an attractive option for employees joining companies with high potential for growth. But there are risks, even if the company’s stock price is poised to increase as employers buy the outstanding shares. Some banks charge high fees for the sale of single stocks, even if you are the one handling the trades, writes contributor Cicely Jones. Then there are capital gains taxes you’ll have to pay, which are discounted based on how long you’ve held the stock. And of course, there are risks if you do not have a diversified investment portfolio. More on employee compensation news in today’s newsletter. Happy reading, and hope you have a lovely week! |