The Atlantic
The Stock Buy Back Swindle Image Credit: The Atlantic
The Stock Buy Back Swindle Image Credit: The Atlantic

The Stock-Buy Back Swindle

American corporations are spending trillions of dollars to repurchase their own stock. The practice is enriching CEOs—at the expense of everyone else.

Jerry Useem

IN THE EARLY 1980s, a group of menacing outsiders arrived at the gates of American corporations. The “raiders,” as these outsiders were called, were crude in method and purpose. After buying up controlling shares in a corporation, they aimed to extract a quick profit by dethroning its “underperforming” CEO and selling off its assets. Managers— many of whom, to be fair, had grown complacent— rushed to protect their institutions, crafting new defensive measures and lodging appeals in state courts. In the end, the raiders were driven off and their moneyman, Michael Milken, was thrown in prison. Thus ended a colorful chapter in American business history.

Or so it seemed. Today, another effort is under way to raid corporate assets at the expense of employees, investors, and taxpayers. But this time, the attack isn’t coming from the outside. It’s coming from inside the citadel, perpetrated by the very chieftains who are supposed to protect the place. And it’s happening under the most innocuous of names: stock buybacks.

You’ve seen the phrase. It glazes the eyes, numbs the soul, makes you wonder what’s for dinner. The practice sounds deeply normal, like the regularly scheduled maintenance on your car.

It is anything but normal. Before the 1980s, corporations rarely repurchased shares of their own stock. When they started to, it was typically a defensive move intended to fend off raiders, who were


Continue Reading with Magzter GOLD Subscription

Log in if you're already a subscriber

Continue Reading This Article For FREE By Downloading The Magzter App

Magzter for iOS Magzter for Android

To continue reading on the website, Click here

Get unlimited access to thousands of curated premium story and 5,000+ magazines

Try FREE for 7 days or

Download the Magzter App and
Try FREE for 30 days


More from The Atlantic