Jason YipBoards Often Misunderstand What #StockBuybacks Really Cost https://hbr.org/2026/03/boards-often-misunderstand-what-stock-buybacks-really-cost
Stock buybacks are payroll in disguise.
Boards Often Misunderstand What Stock Buybacks Really Cost
Boards of directors frequently overlook the financial consequences of share buybacks used to counteract dilution from stock-based compensation. The typical cycle begins with equity grants to employees, eventually requiring companies to spend cash repurchasing shares. Audit and compensation committees often label these grants as “non-cash,” which distorts reported performance metrics and encourages even greater use of equity pay. This chain of misunderstandings results in less effective decision-making and highlights the need for boards to accurately measure the real cost of equity compensation, thereby improving planning, incentive alignment, and value creation for shareholders.
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