NEW YORK (Reuters) – U.S. corporate buybacks are being targeted in U.S. President Joe Biden’s 2023 budget plan announced Monday, which seeks to discourage corporations from using profits to repurchase stocks in order to benefit executives.
Under the plan https://www.whitehouse.gov/wp-content/uploads/2022/03/budget_fy2023.pdf, company executives would be required to hold on to company shares that they receive for several years after taking them, and they would be prohibited from selling shares in the years after a stock buyback.
Such legislation “would align executives’ interests with the long-term interests of shareholders, workers and the economy,” according to the proposal.
Share repurchases are one way that companies use cash. They account for a big part of corporate earnings growth by reducing the number of outstanding shares. Apple and other market leaders have led the action.
For instance, Apple had bought back $348.3 billion in the five years to the third quarter of 2021, reducing its share count by 22.9% over that period, according to S&P Dow Jones Indices data.
(Reporting by Caroline Valetkevitch; Editing by Megan Davies and Andrea Ricci)
