(NY Times) President Joe Biden’s budget proposal will reportedly include a provision barring company executives from selling their shares following a buyback.
The administration is making a call to freeze the sale of shares by executives for a three-year period after a stock repurchase.
The move by the White House happens after a discovery that top company executives sell more stocks days after a buyback announcement than in any other period.
Share repurchases have heightened recently, with a record $882 billion buybacks last year among the S&P 500 companies. Apple is spending over $20.4 billion buybacks, while Meta Platforms wants to repurchase $15 billion.
Goldman expects share buybacks to surpass $1 trillion this year, with proponents saying it is a good way for cash allocation by companies. Critics warn that buybacks have been used to artificially boost stock prices and raise stock-based executive compensation.
It now remains to be seen if Biden’s proposal will pass after earlier attempts failed. The administration sees buybacks as an attempt by executives to enrich themselves rather than investing in their workers.
S&P 500 is down -0.32%.
