Dividends directly enrich stockholders. Stock buy back programs directly enrich executives
This is not completely accurate.
BOTH are intended to directly enrich
current stockholders.
Dividends offer an immediate return on investment that is separate from any appreciation in stock value. This is taxable income.
Stock buybacks are intended to reduce the # of shares outstanding, theoretically increasing the value of any future dividend per share as well as increase the value of the stock itself (which remains untaxed until the stock is sold for a profit).
The reason the DAL stock buyback program is so egregious is for several reasons:
1. Because that money can be used to compensate employees who have previously sacrificed in the past for the benefit of the company (read: bring their compensation up to where it SHOULD be now, not where it should've been in the 1st place)
2. Because the mgmt team is largely compensated with stock, not taxable cash (income).
Simply put, RA is using company money to further line his 17.9 MILLION share interest in the company...a direct conflict of interest IMHO...while concurrently demanding concessions from his employees.
DAL Delta Air Lines Inc Executive Compensation
Richard Anderson's compensation
2010 - $8,041,271 ($6M in stock, not including options)
2011 - $8,854,554 ($7M in stock, " " " )
2012 - $12,575,572 ($7M in stock, " " " )
2013 - $14,375,902 ($9M in stock, " " " )
2014 - $17,589,867 ($9.5M in stock. " " " )
Has your pay doubled in the last 4 years???
Net net...RA is eating from the banquet before his employees. This is a direct abdication of authentic and true leadership. What makes it even worse is that, under the new TA, he and the other exec's will get their compensation & bonuses taken from profits
BEFORE PS is calculated for the pilot group.
It all adds up to a GIANT middle finger from RA to the pilots.
.