The Advisors' Blog

– Liz Dunshee

If your company conducts “accelerated share repurchases” (ASRs), you should (tactfully) share the findings of this study with your compensation committee. An ASR is a privately-negotiated alternative to a traditional open-market buyback program, and can be completed more quickly. But ASRs are leading to some questionable bonus payouts:

– 29% of companies conducting ASRs would’ve missed EPS targets if they hadn’t conducted the buybacks – compared to 14% of companies that conducted regular open-market repurchases

– CEOs of companies conducting ASRs were more likely to have EPS-contingent bonuses

– When calculating payouts, compensation committees adjusted EPS for the ASR at only 3 of the 239 companies

This Cooley blog gives more detail about the study and why compensation committees should carefully consider the timing and impact of any accelerated share repurchase.