Worcester Business Journal

14 Worcester Business Journal | September 16, 2019 | wbjournal.com F O C U S B A N K I N G & F I N A N C E $6.4 billion on stock e year aer the federal tax law changed, the largest Central Mass. public companies increased spending on stock buybacks by 93% BY GRANT WELKER Worcester Business Journal News Editor Company Date of authorization Share value Notes: Time frames are only given for buybacks when disclosed by companies. Boston Scientific reported purchasing $125 million in 2014, and as of the end of 2018 had approximately $535 million remaining available under the 2013 share repurchase program. Hologic's second authorization replaced the prior one. Source: U.S. Securities & Exhange Commission (company annual reports) Future buybacks Central Massachusetts public companies have authorized stock buybacks to allow for more purchases in the years ahead. I n the first half of 2019, Waters Corp., a Milford scientific equip- ment maker, bought back more than $1.3 billion worth of its own stock: as much as it did from 2014 to 2017 combined. Since a 2017 federal corporate tax change, Waters hasn't been alone. Public companies across the country – as well as others in Central Massachusetts including TJX Cos. and Hologic – have been spending more money than ever buying their own shares, a process di- viding economic experts on whether the trend has been a good or bad one. To supporters, stock buybacks – in which a company purchases its own shares off the stock market – are another way of using money to make investments, and a sign of a company's self-confidence. To detractors, the record-setting buy- backs are a sign of a failed trickle-down benefit from the 2017 federal tax cut and a way for a company's shareholders – including its own top executives – to get richer at the expense of the company's everyday workers. Among the strongest critics is Wil- liam Lazonick, the president of the Ac- ademic-Industry Research Network in Cambridge. Lazonick has advocated for banning buybacks, arguing they enrich shareholders at the expense of workers or broader investment at a company. "at's what's gone by the board here," Lazonick said of a benefit to everyday workers. Benefit to investors Joseph Foley, an accounting professor at Assumption College in Worcester and the founding dean of its new Grenon School of Business, said he sees virtually no trickle-down gain to workers at such large public companies. Supporters of the federal tax overhaul said corporate savings would be passed on to workers and consumers. "It certainly doesn't trickle down in the big companies," Foley said, express- ing more confidence smaller firms without the same shareholder pressures have used savings more for investment or worker benefits. "I'd like to see at least a recognition that they do have a social responsibility," he added of the larger companies. Others support buybacks, including Steve Ng, a finance professor Clark University in Worcester, who said public companies exist to maximize value for their shareholders. Companies want to be a good corporate citizen but most put those thoughts aside for the good of those who have their money in that firm, he said. "I want to invest in a company that will look out for me, because I'm making the investment," Ng said. Buybacks can simply shi – not re- place – investment, Aswath Damodaran, a finance professor at New York Univer- sity told investment firm Goldman Sachs in an interview. Some companies are buying back stock that shouldn't be and workers aren't sharing in as much of the windfall as they could be, he said, but more broadly, buybacks allow money to be invested in companies providing better opportunities. Less debatable is another effect of buybacks: ey support a company's stock price by having fewer shares on the market, and make earnings-per- share look higher for the same reason Almost one in four companies on the S&P 500 Index boosted their earnings- per-share last year by reducing their share count in such a way, according to S&P Dow Jones Indices. A U.S. Securities & Exchange Com- mission study found companies bene- fited from a 2.5% stock-price boost on average in the 30 days aer announcing a buyback. "It does support the stock, whether it's a good investment or bad," said Howard Silverblatt, a senior industry analyst at S&P Dow Jones Indices, a firm closely tracking buybacks. Yet even SEC Commissioner Robert Jackson is a critic. Jackson, who was appointed by President Donald Trump in January 2018, criticized companies in a speech five months later for using tax savings on what he called massive buybacks instead of on retraining their workforce or raising wages. At a Center Waters Corp. in Milford has bought more than $2.6 billion of its own stock since a 2017 corporate tax overhaul. TJX Feb. 2018 $3 billion Feb. 2019 $1.5 billion Boston Scientific Jan. 2013 $1 billion IPG Photonics July 2018 $125 million over next year Hologic June 2016 $500 million over five years June 2018 $500 million over five years Waters Corp. April 2018 $3.5 billion over three years January 2019 $4 billion over two years PHOTO/TMS AERIAL SOLUTIONS

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