Tags: CEOs | Fink | dividend | criticism

Other CEOs Back Fink on Dividend, Buyback Criticism

By    |   Sunday, 30 March 2014 05:58 PM

BlackRock CEO Larry Fink recently sent a letter to corporate executives criticizing their focus on share buybacks and dividends rather than long-term investment for their companies.

At least some corporate chiefs agree with him, CNBC.com reports.

"The theme of Mr. Fink just resonated with me. You're darn right we should innovate," Bart Shuldman, CEO of TransAct Technologies, a printer company based in Hamden, Conn., told the news service.

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"We need that, not only for shareholder value, but we need it because we can then grow our companies, hire more people and get our economy going. If all we're doing is buying back stock and paying dividends, some people make out, but it's not going to enhance the value of our companies. And it's not going to do all that great for the country either."

For a company to have long-term focus, it needs patient shareholders, Billy Cyr, CEO of privately-held Sunny Delight Beverages, told CNBC.com.

"It really comes down to the alignment of the shareholder's interests . . . and the faith they have in the management's ability to deliver the growth," he said.

"If they trust me and I trust them, we can focus on long-term growth. If not, it will quickly become all about cash returns."

But Robert Buckland, head of global equity strategy for Citigroup, says the idea that increased buybacks and dividends have led companies to cut capital expenditure "seems misplaced."

In a commentary obtained by Barron's, he wrote, "Since 2010, global listed-company capex is up 26 percent to $2,567 billion. Over the same period, cash paid out through dividends and buybacks is up 40 percent to $1,394 billion. So, sure, payouts are up more, but this has not really been at the expense of capex. In fact, there has been a boom in both."

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InvestingAnalysis
BlackRock CEO Larry Fink recently sent a letter to corporate executives criticizing their focus on share buybacks and dividends rather than long-term investment for their companies. Some corporate chiefs agree with him, CNBC.com reports.
CEOs,Fink,dividend,criticism
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2014-58-30
Sunday, 30 March 2014 05:58 PM
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