monabri wrote:(The conversation might have gone.... )
"We've got 4bn pounds ...what can we do with it?"
" err..dunno, we've been flogging stuff off ....it'd look daft to buy something to expand the empire! "
" What's the shareprice.....about 4 quid"
" so...4bn quid at 4 quid a pop....about 1 billion shares....get the CFO to confirm that ! "
" but we can't do it all at once, that'd be 25% of the current pool ..so let's do it over 5 tranches"
" what would that do, if we were to have 5 tranches and bought back that quantity?"
" well, the sharecount would be back at what it was in 2012"
" we'd save ~£200 per annum in dividends and a likely increase in shareprice, the shareprice would probably react favourably to a lot less shares and we could justify a pay increase."
" did you say, pay increase..?"
" oh well, in the absence of any other plan...."
I suspect this is the conversation that happens at any meeting where financial engineering of this type is discussed.