×

Share counts don’t follow buybacks

Exec options return stock to open market

Companies often buy back their own shares, and Wall Street believes this enhances shareholder value. With fewer shares outstanding, earnings per share should climb, boosting the stock price.

S&P Capital IQ recently screened its database to look at buybacks by major media companies. The film and TV companies that bought back shares in the quarter ended June 2011 did have fewer shares in public hands, but the numbers don’t always add up.

CBS Corp. bought back 9.9 million shares, but retired only 6 million during the period — a 39% difference. Viacom had an almost 20% discrepancy between the 14.3 million shares it repurchased and the 11.4 million actually withdrawn from the market.

Why don’t share counts drop by the number of shares repurchased? Executive stock options may be a reason.

Execs exercising such options buy from the pool the company holds (called treasury stock), which includes some of the shares that were recently repurchased. Since the only reason to exercise a stock option is that the price execs will pay for the stock is lower than the market price, they often immediately sell those shares, returning them to the open market.

Popular on Variety

Thus shares the company may have repurchased in a buyback can go from “shares outstanding” to “treasury stock” and back to “shares outstanding” in no time at all.

More News

  • Logan Paul Ninja Spree

    How Logan Paul and Ninja Helped 'Spree' Cast Capture Influencer Culture Gone Wild

    When it came to depicting the gonzo nature of influencer culture, “Spree” stars Joe Keery and Sasheer Zamata and director Eugene Kotlyarenko did a deep dive into the haves and have-nots of the internet. “Spree,” which premiered Friday at Sundance Film Festival, follows a rideshare driver named Kurt Kunkle (Keery) who will stop at nothing [...]

  • Trent Reznor and Atticus Ross

    If 'Old Town Road' Wins a Grammy, Will Nine Inch Nails Share the Award?

    Nine Inch Nails, a banjo and Lil Nas X made unlikely bed partners in the genre-bending mega-smash “Old Town Road,” which included a track from NIN’s largely instrumental 2008 album “Ghosts I–IV.” But while Trent Reznor and frequent collaborator Atticus Ross receive co-producer/co-writer credits for having created the hit’s hook, don’t expect their names to [...]

  • A PERFECTLY NORMAL FAMILY

    Watch the Exclusive Trailer of Rotterdam/Goteborg Entry ‘A Perfectly Normal Family’

    Variety has been given exclusive access to the international trailer of the Danish film “A Perfectly Normal Family,” due to compete both at Rotterdam’s Big Screen Competition, and at Göteborg’s Nordic Film Competition. Malou Reyman’s debut feature has been a hot property for sales agent New Europe Film Sales, ever since it was sneak peeked [...]

  • WEST HOLLYWOOD, CALIFORNIA - JANUARY 23:

    Motown, Atlantic, Roc Nation Executives Gather for Grit Before the Gram Event

    On Thursday, Jan. 22, amidst the mayhem of Grammy week in Los Angeles, the Vanity Group CEO Karleen Roy  threw her inaugural “Grit Before the Gram” event. Billed as “the soundtrack of our solidarity,” the evening was produced to provide an environment of unity, awareness and impact. Agents, producers, managers, directors and label executives were [...]

  • Bebe Rexha and Cyndi LauperBebe Rexha's

    Bebe Rexha, Kelsea Ballerini, Cyndi Lauper Promote Harmony to Counter Gender Bias

    Bebe Rexha hosted female artists, songwriters and producers at Los Angeles music industry hotspot Craig’s for her third annual Women in Harmony pre-Grammy brunch on Friday. The star-studded guest list included Cyndi Lauper, Kelsea Ballerini, Tinashe, Jordin Sparks, Dinah Jane, Natasha Bedingfeld, Sabrina Carpenter, Zhavia, Lindsey Stirling, JoJo, Daya, Becky G, Bea Miller, Ashlee Simpson, [...]

More From Our Brands

Access exclusive content