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<p>The Department commissioned research in 2018 to establish whether share buybacks
are being misused to hit performance targets, inflate executive pay and reduce business
investment. The research was published on 19 July 2019. It found no relationship between
share repurchases and investment and no evidence to suggest that buybacks are being
used systematically to artificially hit earnings per share (EPS) targets.</p><p> </p><p>The
research did, however, reveal that the presence of EPS targets in executive remuneration
plans correlates with lower levels of investment. The study said that it would be
premature to draw firm conclusions but that the area warranted further research. The
Department intends to follow this up and plans to commission further research into
whether there is a direct link (rather than through the use of buybacks) between executive
pay targets and levels of investment and between performance targets and short-term
executive decision-making.</p>
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