A recent article in the Evening Standard highlighted Terry Smith, Chief Executive of Tullett Prebon concerns about the Financial Services Industry's ability to provide investors with protection and value for their investments. Smith focused particularly
on share buy-backs, this is where a company uses its capital to buy back its shares. This has the effect of artificially inflating earnings per share. Great for the company and advisors but with no dividends paid, what's in it for the shareholders?
Of course shareholders can vote down any board resolution to undertake a share buy-back but this does not appear to happen very often. Why?
I too have been bleating for some time about shareholder democracy and how shareholders seem reluctant or ambivalent to use their votes at AGMs to protect their interests.
Terry Smith has pointed out a very real example of where shareholders seem happy to act like sheep and allow firms to lead them by the nose away from what is in their real interest. Is it lack of knowledge or just a clever sales pitch that is fooling the
Why doesn't the Regulator take a closer look to examine and question Corporate Events like share buy-backs to see if they really are in the shareholders best interest?