Biden budget plan seeks to add corporate buyback restrictions

View of the U.S. flag as a trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 21, 2022. REUTERS/Brendan McDermid/File Photo

3Ml43 text__regular__2N1Xr text__large__nEccO body__base__22dCE body__large_body__FV5_X article-body__element__OOj6H”>NEW YORK, March 28 (Reuters) – U.S. corporate buybacks are being targeted in U.S. President Joe Biden‘s 2023 budget plan announced Monday, which seeks to discourage corporations from using profits to repurchase stocks in order to benefit executives.

3Ml43 text__regular__2N1Xr text__large__nEccO body__base__22dCE body__large_body__FV5_X article-body__element__OOj6H”>Under the plan, company executives would be required to hold on to company shares that they receive for several years after taking them, and they would be prohibited from selling shares in the years after a stock buyback.

3Ml43 text__regular__2N1Xr text__large__nEccO body__base__22dCE body__large_body__FV5_X article-body__element__OOj6H”>Such legislation “would align executives’ interests with the long-term interests of shareholders, workers and the economy,” according to the proposal.

3Ml43 text__regular__2N1Xr text__large__nEccO body__base__22dCE body__large_body__FV5_X article-body__element__OOj6H”>Share repurchases are one way that companies use cash. They account for a big part of corporate earnings growth by reducing the number of outstanding shares. Apple (AAPL.O) and other market leaders have led the action.

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l43 text__regular__2N1Xr text__large__nEccO body__base__22dCE body__large_body__FV5_X article-body__element__OOj6H”>For instance, Apple had bought back $348.3 billion in the five years to the third quarter of 2021, reducing its share count by 22.9% over that period, according to S&P Dow Jones Indices data.

3Ml43 text__regular__2N1Xr text__default__UPMUu sign-off__text__328ww”>Reporting by Caroline Valetkevitch; Editing by Megan Davies and Andrea Ricci

3Ml43 text__regular__2N1Xr text__large__nEccO body__base__22dCE body__large_body__FV5_X article-body__element__OOj6H”>Our Standards: The Thomson Reuters Trust Principles.